UNIVERSITY  OF  CALIFORNIA 
AT   LOS  ANGELES 


THE  GIFT  OF 

MAY  TREAT  MORRISON 

IN  MEMORY  OF 

ALEXANDER  F  MORRISON 


THE   PROBLEM   OF   MONOPOLY 


^ot^^. 


COLUMBIA   UNIVERSITY    LECTURES 


THE 

PROBLEM  OF  MONOPOLY 

A  STUDY  OF  A  GRAVE  DANGER 

AND  OF  THE  NATURAL  MODE 

OF  AVERTING  IT 


BY 

JOHN  BATES  CLARK,  LL.D. 

PROFESSOR  IN  COLUMBIA  UNIVERSITY 

AUTHOR  OP  "  THE  PHILOSOPHY  OF  WEALTH  "  J 

"  THE    DISTRIBUTION    OF    WEALTH  "  ; 

AND  "  THE  CONTROL  OF  TRUSTS" 


iReto  l^orfe 

THE  COLUMBIA  UNIVERSITY  PRESS 

THE  MACMILLAN  COMPANY,  Agents 

LONDON  :  MACMILLAN  &  CO.,  Ltd, 

1904 

.    -    ,  ..      .         .  /i,ll  .rig}iJ§  resenved .  „  .  ,  _,     ,,     ,    , 


Copyright.  1901 
By  the  MACMILLAN  COMPANY 


Set  up,  electrotyped,  and  published  June,  1904 


THE  MASON  PRESS 
SrRACUSS.   KHV7>YOr.Ii 


PREFACE 

This  little  work  gives  permanent  form  to  a  course  of 

lectures  recently  delivered  in  Cooper  Union,  New  York. 

They  were  given  in  an  off-hand  way  and  stenographically 

reported ;  and  they  are  now  published  with  a  minimum 

of  revision.     The  considerate  reader  will,  as  I  hope,  take 

the  book  for  what  it  is,  in  view  of  the  manner  of  its 

S?     preparation  and   its  general  purpose.     That  purpose   is 

(M     merely  to  apply  to  important  problems  economic  prin- 
ce 

*    ciples  which  have  recently  become  known. 

The  industrial  system  which  developed  under  a  regime 
z      of  freedom  and  competition  has  become  perverted  by  the 
2,      presence  of  monopoly;  and  the  thing  to  be  accomplished 
%     is  not  to  revolutionize  the  system  by  the  method  of  state 
socialism,  nor  yet  to  cause  it  to  reverse  its  natural  devel- 
<      opment  by  resolving  the  great  corporations  which  now 
dominate  it  into  their  constituent  elements,  as  crude  anti- 
trust legislation  would  try  to  do,  but  rather  to  retain  the 
corporations  for  their  efficiency  while  taking  from  them 
o     their  power  of  oppression.     Nature  has  shown  us  how  to 
accomplish  this,  by  revealing  forces  which  now  partly 
accomplish  it,  though  without  some  action  by  the  state 
they  do  their  work  imperfectly.     We  have  to  clear  away 


4S2973 


Vi  PREFACE 

the  obstacles  that  interfere  with  these  natural  forces. 
The  policy  is  not  destructive  but  preservative,  since  it 
demands  that  we  do  not  kill  the  industrial  monsters  which 
threaten  and  injure  us,  but  tame  them  and  convert  them 
into  useful  servants. 

It  is  monopolies  in  general,  and  not  merely  the  so- 
called  trusts,  that  we  have  to  deal  with,  and  it  is  a 
condition  of  freedom  which  we  have  to  restore.  On  the 
descriptive  side  the  book  is  too  brief  to  add  much  to 
common  knowledge;  but  on  the  basis  of  accepted  facts  it 
maj'  possibly  make  more  apparent  the  true  way  out  of 
our  difficulties.  The  route  is  a  clearly  defined  one,  though 
following  it  in  the  face  of  obstacles  will  require  very 
strenuous  effort. 

JOHN  BATES  CLARK. 

Columbia  University,  New  York. 


CONTENTS 


PAGE 

CHAPTER  I 
The  Growth  of  Corporations 3 


CHAPTER  II 

The  Sources  of  the  Corporations'  Power  for  Evil. ...     25 

CHAPTER  III 
Great  Corporations  and  the  Law 39 

CHAPTER  IV 
Organized  Labor  and  Monopoly 60 

CHAPTER  V 
Agriculture  and  Monopolies 86 

CHAPTER  VI 
Governmental  Monopolies  108 


COLUMBIA  UNIVERSITY  LECTURES 


THE  PROBLEM   OF  MONOPOLY 

DELIVERED 

IN    THE    COOPER   UNION 

19  0  4 


CHAPTER  I 

THE  GEOWTH  OF  COEPOEATIONS 

I  know  of  no  more  startling  and  disquieting  tendency 
of  recent  times  than  the  growth  of  those  great  corporations 
which  have  gathered  to  themselves,  each  in  its  own  field, 
nearly  all  the  business  that  is  there  transacted.  They 
look  like  all-consuming  monopolies  and  we  regarded  them 
at  first  with  an  alarm  which  has  partly  subsided  as  we 
have  gotten  more  and  more  used  to  them.  That  alarm, 
however,  was  not  ill  grounded.  The  size  and  power  of 
the  new  corporations  was  enough  to  excite  it.  If  the 
dinosaurs  which,  geologists  say,  once  wandered  to  and 
fro  upon  this  earth,  terrifying  and  devouring  as  they 
went,  were  to  reappear  in  bodily  presence,  they  would 
affect  our  nerves  about  as  the  corporations  would  have 
done  if  we  had  not  gotten  used  to  them  gradually.  The 
modern  monster  looks  as  all-devouring  as  the  ancient  one 
and  one  of  the  questions  which  we  have  now  to  ask  our- 
selves is  whether  they  really  are  as  predatory  as  they  look. 
Do  they  devour  everything  within  their  reach  ?  We  have 
observed  that  they  do  a  great  deal  of  devouring,  and  yet 
we  have  seen  that  some  living  things  which  might  have 
fallen  a  prey  to  them  survive.     A  competitor  here  and 


4  THE  PKOBLEM  OF  MONOPOLY 

there  holds  his  place.  It  is  much  as  though  a  compara- 
tively insigr- ill  cant  auimal,  wandering  about  in  one  of 
those  early , fo.i'.ests  iji  easy  siiht  and  reach  of  one  of  the 
dinosaurs  went  imdevoured  and  unattacked— possibly  by 
reason  of  his  insignificance.  The  monster  may  have 
looked  at  him  out  of  the  corner  of  an  eye  and  left  him 
undisturbed.  Far  otherwise  would  it  have  been,  however, 
if  the  great  animal  had  considered  his  feeding  ground 
invaded  and  the  abundance  of  his  food  supply  reduced. 
Then  there  would  have  been  a  snap  of  the  hungry  jaws 
and  it  would  have  been  all  over  with  the  smaller  animal. 

Now  something  of  this  sort  happens  whenever  one  of 
the  monster  corporations  finds  a  smaller  one  in  the  way. 
The  great  corporations  know  how  to  dispose  of  a  smaller 
rival,  though  they  do  not  always  use  this  knowledge. 
There  are  conditions  in  which  it  is  not  wise  to  use  it ;  but 
in  a  great  many  instances  they  do  so.  Can  they,  then, 
exterminate  weak  competitors  and  become  monopolies, 
able  to  tax  the  people  at  will?  Certainly  monopoly  is 
an  evil  thing,  and  I  shall  encounter  little  opposition  in 
making  that  statement.  No  one  of  us  is  fond  of  the 
vender  of  necessary  goods  who  says  to  us:  "Aha!  I 
have  the  whole  supply  of  these  goods.  You  must  come 
to  me  for  them  and  I  will  charge  you  what  I  will." 
"We  get  less  and  less  fond  of  this  when  we  pay  bills  for 
more  and  more  articles  manufactured  by  monopolies  and 
sold  to  us  for  more  than  we  formerly  paid  for  them. 


THE  GEOWTH  OF  COEPOEATIONS  5 

Possibly  we  may  also  have  felt  the  effects  of  the  new 
system  in  a  forcing  down  of  our  wages ;  for  neither  prices 
nor  wages  can  possibly  be  normal  under  the  general 
regime  of  monopoly.  There  was  a  time  when  the  prices 
of  goods  were  near  to  their  natural  standards  as  these 
were  fixed  by  the  cost  of  making  them.  Where  there  are 
many  competitors  making  something— shoes,  cotton  goods, 
woolen  cloth,  steel  or  what  not — they  compete  with  each 
other  vigorously  for  business,  and  if  the  price  of  anything 
is  high— if  it  yields  much  more  than  is  necessary  to  pay 
the  wages  of  all  the  labor  and  the  interest  on  all  the 
capital  that  are  employed  in  making  it— there  is  a  chance 
for  somebody  to  make  a  profit  by  going  into  that  business. 
Then  it  is  that  everyone  who  has  a  small  mill  wants  to 
make  it  larger,  and  people  who  are  in  other  lines  of  busi- 
ness want  to  go  into  this  line  where  a  good  profit  is 
realized.  It  thus  comes  about  that  the  prospect  of  a 
special  gain  draws  additional  labor  and  capital  to  the 
point  where  profit  is  realized,  more  and  more  goods  are 
made  and,  in  the  end,  they  have  to  be  sold  at  natural 
prices.  If  there  is  a  "boom"  in  cotton  goods,  more  and 
more  of  them  are  put  upon  the  market,  lower  and  lower 
go  the  prices  and  all  special  profit  vanishes.  The  goods 
are  still  sold  for  about  enough  to  pay  the  wages  of  all  the 
laborers,  the  salaries  of  all  the  managers,  the  insurance 
against  all  risks,  and  the  interest  on  all  the  capital  at  the 
ordinary  rate;  but  that  does  not  leave  a  net  surplus  that 


6  THE  PROBLEM  OF  MONOPOLY 

■will  attract  any  more  capital.  This  was  our  old  philos- 
ophy of  prices,  and  it  was  a  very  good  one  under  the  old 
conditions.  In  a  way  it  is  good  in  principle  still ;  but  not 
all  prices  now  hold  at  that  rate  at  which  nobody  makes 
any  net  profit  out  of  them.  Do  you  think  that  when  you 
pay  the  bill  for  some  article  manufactured  by  a  trust  you 
do  not  put  into  somebody's  pocket  more  than  the  wages  of 
labor  and  the  interest  on  capital  have  taken  out  of  it? 

The  trusts  are  fond  of  advancing  prices.  They 
have  to  do  it  hy  reducing  the  output  of  their  goods.  If 
they  did  not  reduce  the  product  they  could  not  advance 
the  prices.  There  is  an  old  proverb  about  leading  a  horse 
to  water  but  not  being  able  to  make  him  drink;  you  might 
offer  any  amount  of  goods  to  the  public  at  a  high  price, 
but  you  cannot  compel  the  public  to  buy  them.  If,  how- 
ever, you  cut  down  sufficiently  the  amount  that  you  have 
to  offer,  the  public  will  buy  the  goods  at  the  higher  prices ; 
and  so  it  comes  about  that  the  trusts  diminish  the  output 
of  the  goods,  holding  it  down  to  an  abnormally  small 
amount,  in  order  that  the  prices  may  be  held  at  an  abnor- 
mally high  figure. 

Then  there  is  a  problem  concerning  the  wages  of  labor. 
We  had  once  an  exceedingly  simple  philosophy  of  wages, 
which  taught  us  quite  correctly  where  competition  may 
help  the  laborer,  "Where  many  manufacturers  are  seek- 
ing labor  as  well  as  many  laborers  seeking  employment, 
there  is  a  play  of  forces  which  gives  to  a  man  approxi- 


THE  GEOWTH  OF  CORPORATIONS  7 

mately  what  he  is  worth  to  an  employer — that  is,  what  his 
presence  adds  to  the  output  of  a  mill.  Can  that  be 
altogether  true  under  a  regime  of  monopoly?  If  the 
manufacturer  puts  up  the  price  to  a  certain  level  so  that 
a  workman  really  creates  more  in  his  mill  than  men  create 
elsewhere,  does  he  pay  extra  wages  ?  He  pays  the  market 
rate,  and  that  is  less  than  the  men  are  worth  to  him. 
Possibly,  if  circumstances  make  him  liberal,  he  may  secure 
the  favor  of  his  employees  by  giving  them  wages  corre- 
sponding, in  a  measure,  with  the  special  and  extra  value 
which  they  have  in  his  mill.  It  is  probably  true  in  the 
history  of  a  considerable  number  of  trusts  that  they  have 
paid  their  workmen  just  a  shade  more  than  such  work- 
men could  elsewhere  get.  The  trusts  get  a  rather  high 
price  from  the  public  and  share  gains,  in  some  degree, 
with  their  men.  Paying  one  class  of  laborers  a  little  more 
in  the  way  of  wages  than  others  can  get  is,  indeed,  a 
good  thing  for  the  particular  workmen  who  happen  to 
be  in  a  position  which  enables  them  to  get  such  a  favor. 
A  corporation  may  adopt  this  liberal  policy  of  its  own 
volition  or  may  be  compelled  to  do  it  by  a  strong  trade 
union.  But  how  about  laborers  altogether  outside  of  the 
domain  of  the  trusts?  Can  they  get  higher  wages  than 
formerly  prevailed  ?  On  the  contrary,  they  get  lower  real 
wages  measured  in  food,  clothing,  furniture,  house  room, 
etc.  They  have  to  buy  these  things  with  money  and  the 
prices  of  them  have  risen.     Moreover,  it  is  probable  that 


8  THE  PROBLEM  OF  MONOPOLY 

the  Avages  of  most  labor,  even  measured  in  money,  are 
made  smaller  by  the  influence  of  monopoly.  Unless  a  man 
is  on  the  inside  of  the  favored  circle  he  has  to  thank  mo- 
nopoly for  some  reduction  of  his  real  income. 

Very  great  will  be  the  transformations  that  vdll  come 
if  ever  these  monster-like  corporations  shall  have  full 
possession  of  the  field  of  industry.  As  yet  they  are  very  far 
from  this  goal;  nevertheless,  they  have  enough  of  the  field 
to  throw  society  into  an  unnatural  state.  Even  political 
life  is  disturbed,  and  neither  elections  nor  law  making  can 
go  on  in  a  natural  way  in  the  presence  of  great  monopo- 
lies. We  cannot  now  go  far  into  the  domain  of  polities. 
We  shall  have  enough  to  do  if  we  try  only  to  make  a 
cursory  study  of  the  economic  action  of  great  corpora- 
tions. Bui  there  is  as  little  doubt  as  there  is  about  any- 
thing in  human  affairs  that  their  presence  in  politics  is 
very  baneful.  This  is  "a  government  of  the  people,  for 
the  people  and  by  the  people,"  is  it  not?  Do  not  we  elect 
our  own  officers  at  our  pleasure  ?  We  cast  our  votes  and, 
for  the  most  part,  our  votes  are  counted.  The  percentage 
of  those  that  are  not  counted  is  small,  and  if  voting  were 
really  ruling,  this  would  still  be  the  type  of  government 
which  Abraham  Lincoln  believed  he  had  seen  forever 
established,  a  genuine  people's  state.  But  I  notice  that 
when  I  am  invited  to  vote  I  have  not  a  very  large  selection 
of  candidates  to  choose  from.  Somebody  else  does  the 
nominating,  and  if  he  makes  me  choose  between  two  of 


THE  GKOWTH  OF  COKPOEATIONS  9 

liis  own  men,  how  much  does  the  voting  amount  to? 
There  is  something  which  we  call  a  machine  which  puts 
candidates  in  nomination,  and  without  assuming  to  know 
very  much  about  the  workings  of  these  machines,  or  to 
talk  about  them  in  this  discussion,  we  may  admit  that  their 
workings  are  not  altogether  uninfluenced  by  the  power 
of  consolidated  wealth.  Corporations  have  something  to 
say  as  to  what  the  political  machines  shall  do ;  if  it  should 
ever  come  to  this,  that  corporations  should  control  the 
political  machines,  that  the  machines  should  control  the 
nominations,  and  that  the  people  should  only  be  invited  to 
ratify  these  nominations,  how  much  would  be  left  of 
democracy?  In  particular  where  should  we  look  for  a 
power  able  to  regulate  the  corporations  ?  Not  to  mention 
the  federal  government,  we  should  only  have  to  let  the 
state  legislatures  become  the  property  of  the  trusts  in 
order  to  cause  every  effort  to  control  the  trusts  to  present 
the  appearance  of  a  vicious  circle.  To  curb  the  power  of 
corporations  we  should  apply  to  legislatures  selected  by 
party  machines  owned  by  corporations.  Thank  fortune, 
there  are  powers  still  left  in  the  state  which  massed  capital 
does  not  own. 

For  the  preservation  of  much  that  is  dear  to  us  we 
must  control  the  government  sufficiently  to  make  it  con- 
trol the  corporations,  and  some  day  we  shall  manage  to 
do  it.  Some  day  we  shall  find  out  what  needs  to  be  done, 
act  on  the  knowledge  and  compel  our  legislators  to  make 


10  THE  PKOBLEM  OF  MONOPOLY 

laws— not  to  smash  the  corporations  as  some  legislatures 
have  tried  to  do— but  to  coutrol  them.  We  shall  get  the 
full  benefit  of  their  magnificent  strength  and  make  them 
do  good  and  not  evil.  Infinitely  harder  is  it  to  control 
them  than  to  smash  them,  and  the  task  that  is  set  for  us  is 
that  of  letting  them  live  and  work  without  sacrificing  to 
them  our  economic  and  political  freedom. 

It  is  w^ell  to  notice  the  chief  cause  of  the  growth  of 
these  great  powers.  In  1776,  a  date  which  curiously 
enough  appears  to  coincide  Avith  the  beginning  of  the 
independence  of  the  United  States,  Adam  Smith,  the  most 
discerning  of  the  economists,  came  to  the  conclusion  that 
corporations  never  could  play  a  very  important  part  in 
this  world.  He  said  they  were  not  so  efficient  as  private 
employers  and  called  attention  to  the  fact  that  the  cor- 
poration has  to  be  managed  by  a  hired  officer,  that  the 
stockholders  cannot  oversee  their  business  and  that  hired 
managers  never  care  for  it  as  well  as  owners  would  do. 
The  most  painstaking  manager  of  a  business  is  the  man 
who  owns  the  whole  of  it  himself.  A  great  deal  would 
slip  through  the  fingers  of  the  salaried  superintendent 
which  a  private  owner  would  hold.  While,  therefore, 
Adam  Smith  thought  that  there  would  be  a  few  large 
enterprises  which  would  require  more  capital  than  any 
private  owner  could  furnish,  and  that  these  would  call  a 
few  corporations  into  being,  he  concluded  that  there  never 
could  be  very  many  of  them.     The  field  as  a  whole  would, 


THE  GEOWTH  OF  COEPOEATIONS  H 

he  thought,  continue  to  be  occupied  by  individual  pro- 
ducers, who  would  ovm  their  own  shops  and  control  every- 
thing by  close  personal  supervision. 

It  has  not  worked  in  that  way.  Something  like  seven- 
ty-five years  after  Adam  Smith  stated  his  conclusions 
another  great  economist,  Mr.  John  Stuart  Mill,  discussed 
the  prospects  of  the  corporation.  He  concluded  that 
Adam  Smith  had  underestimated  the  efficiency  of  cor- 
porations. In  the  interval  between  the  time  of  Smith  and 
that  of  Mill,  railroads  had  come  into  being  and  had 
attained  a  considerable  growth,  and  Mr.  Mill  concluded 
that  individuals  would  never  build  many  railroads,  though 
he  thought  they  would  still  build  and  run  the  factories  and 
the  shops.  Aside  from  railroads  and  steampship  lines  and  a 
few  other  departments  of  business,  which  would  gravitate 
into  the  hands  of  corporations,  the  majority  of  busi- 
ness would  still  be  transacted  by  individual  owners  and 
by  partners.  Mill's  expectation  is  far  from  having  been 
realized.  The  problem  now  is  not  whether  the  corpora- 
tion can  survive  in  competition  with  individuals,  but 
whether  in  many  lines  of  business,  anything  can  survive 
except  the  corporation,  A  great  consolidated  company 
has  the  individual  producer  prettj^  much  at  its  mercy. 

The  hundred  years  following  Adam  Smith 's  time  would 
be  characterized  by  most  people  as  an  age  of  incomparable 
progress  due  to  the  introduction  of  machinery.  At  the 
beginning  of  that  century  most  articles  were  made  by 


12  THE  PROBLEM  OF  MONOPOLY 

hand.  Tlio  little  grist  mill  aiul  the  saw  mill  were  to  be 
found,  and  falling  water  turned  millstones  and  drove  saws 
in  a  primitive  way.  There  were  pumps  for  mines  and  a 
very  few  other  applications  of  power  calling  for  rude  and 
simple  machinery.  At  the  end  of  that  hundred  years,  in 
1876,  how  much  of  the  field  was  left  for  old-fashioned 
hand  processes  ?  Some  things  are  still  done  by  hand ;  but 
into  the  making  of  almost  everything  there  enters  some 
machine  work,  and  in  the  case  of  most  things  it  prepon- 
derates. Hand  workers,  so-called,  put  together  things 
that  are  prepared  by  the  machine.  What  we  call  building 
consists  of  hand  labor  to  a  large  extent ;  but  the  final  con- 
struction is  merely  assembling  materials  that  are  made 
here  and  yon  in  mills.  Once  all  the  building  was  done  on 
the  spot  by  hand  labor,  and  though  some  raw  materials 
were  partly  fashioned  by  machinery  this  was  carried  little 
farther  than  to  the  sawing  of  lumber.  There  is,  however,  a 
much  greater  proportion  of  hand  labor  in  building  than 
there  is  in  manufacturing.  Almost  everything  that  is 
sent  by  the  freight  trains  over  the  country  and  in  ships 
over  the  world  is  the  product  of  machine  labor,  and  hand 
labor  does  little  toward  making  it  and  less  toward  carry- 
ing it. 

Now  this  transformation  which  took  place  between 
1776  and  1876  occasioned  a  much  greater  amount  of  dis- 
turbance and  a  more  thorough  reconstruction  of  society 
than  can  ever  again  be  occasioned  by  such  a  cause.     We 


THE  GKOWTH  OF  COEPOEATIONS  13 

shall  still  continue  to  invent  and  apply  machines,  and  we 
shall  still  cause  the  more  efficient  appliance  to  take  the 
place  of  the  less  efficient ;  but  any  change  as  radical  as  the 
putting  of  a  machine  into  the  place  formerly  occupied  by  a 
great  body  of  hand  laborers  we  shall  seldom  again  be  able 
to  make.  There  are  countries  which  still  have  that  change 
before  them.  That  is  true  of  much  of  Asia,  and  when  we 
send  American  products  there  we  start  a  movement  which 
will  end  in  the  making  of  such  products  in  Asia  by  Amer- 
ican processes.  Mere  trade,  traffic  in  goods,  is  only  the 
beginning  of  the  transformation  that  is  coming.  The 
Chinese  empire  will  go  through  the  transforming  process 
through  which  our  country  has  already  gone.  China  now 
does  nearly  everything  by  hand;  but  after  a  time— long 
or  short,  as  the  case  may  be— it  will  learn  to  make  use  of 
machinery ;  and  then  as  we  study  the  Asiatic  problem,  we 
shall  see  something  that  we  scarcely  dream  of  now,  a  vast 
increase  of  manufacturing  in  the  densely  populated  lands 
of  the  East.  They  will  supply  their  own  markets  with 
such  products  and  may  even,  in  time,  send  them  into  ours. 
The  general  transition  from  hand  labor  to  machine 
labor  has,  in  our  own  country,  taken  place  once  for  all. 
We  already  have  machinery  employed  on  such  a  vast  scale 
that  the  most  we  can  hope  for  in  the  future  is  the  improv- 
ing of  machinery  and  the  extending  of  its  field  a  little  here 
and  a  little  there.  It  is  the  making  of  comparatively 
minor   changes   instead   of  sweeping  and  revolutionary 


14  THE  PROBLEM  OF  MONOPOLY 

ones.  The  introdiictiou  of  great  numbers  of  labor-saving 
devices  was  the  disturbing  fact  of  the  first  century  of  our 
republic.  It  threw  men  out  of  their  accustomed  employ- 
ments. Mills  were  set  up  which  made,  even  with  the  rude 
machinery  of  those  early  days,  far  more  articles  than  hand 
labor  could  make,  and  the  artisans'  field  of  employment 
was  abridged.  In  due  time  George  Stephenson  made  his 
locomotive  and  Robert  Fulton  built  his  steamboat,  the 
Clermont,  which  went  puffing  up  the  Hudson  at  no  rapid 
rate,  but  at  a  rate  which  in  the  end  transformed  a  world. 
Locomotives  and  steamers  have  caused  the  earth  to  shrink 
to  small  dimensions,  and  have  made  it  possible  to  go 
around  it  for  a  small  outlay  and  to  send  goods  around 
at  less  cost  than  was  once  involved  in  sending  them 
from  one  English  county  to  another.  The  reduction  of 
freight  charges  on  railroads  and  steamship  lines  has  made 
habitable  the  great  areas  of  the  North  American  continent, 
and  has  opened  new  and  rich  fields  of  employment  for 
those  who  were  displaced  by  machinery.  As  Hargreaves, 
Arkwright  and  Crompton,  by  their  textile  machinery, 
displaced  the  hand  spinners  and  weavers,  Stephenson,  by 
his  locomotives,  made  accessible  homes  for  them  in  the 
Mississippi  valley ;  and  at  the  end  of  a  hundred  years  there 
was  not,  in  the  enlarged  area,  a  greater  percentage  of  idle 
labor  than  there  was  in  the  small  area  at  the  beginning. 
Nevertheless  there  was  an  enormous  displacement  and 
relocation  of  labor  during  the  process.    It  meant  a  vast 


THE  GEOWTH  OF  COEPOEATIONS  I5 

ultimate  gain  secured  at  the  cost  of  immediate  hardship. 
Exactly  that  type  of  hardship  is  not  before  us.  Such  a 
wholesale  disturbance  will,  in  all  probability,  never  again 
take  place. 

It  remains  to  be  seen  what  further  effects  machinery 
can  produce.  The  machine— and  particularly  the  locomo- 
tive—has been  what  we  may  call  a  great  promoter;  it  has 
been  a  great  consolidater  of  business  establishments  and 
has  caused  large  shops  to  be  so  economical  as  to  drive  out 
a  multitude  of  small  ones.  Even  if  manufacturing  were 
still  done  by  hand  the  big  shops  would  be  economical,  but 
they  would  not  drive  out  the  small  ones.  In  flour-making 
cities  such  as  Minneapolis  great  quantities  of  barrels  are 
made.  The  staves  may  be  made  elsewhere  by  machinery, 
but  putting  them  together  is  one  of  the  surviving  hand 
processes.  In  this  branch  of  industry  there  is  not  the 
great  and  decisive  advantage  on  the  side  of  the  big  shop. 
Coopers  can  still  work  in  little  shops  standing  under  the 
shadow  of  big  ones.  If  the  whole  process  of  making  bar- 
rels shall  come  to  be  done  by  machinery  the  big  shop  will 
have  this  field  to  itself  to  the  same  extent  that  it  has 
others.  Where  any  product  is  made  by  machines  and  sent 
into  a  general  market,  size  gives  an  enormous  competing 
advantage.  The  flour  that  fills  the  barrels  cannot  be  made 
in  small  mills;  and  flouring  is  not  the  industry  in  which 
mere  size  of  plant  gives  the  greatest  advantage.  The 
large  mill  can  usually  sell  its  product  more  cheaply  than 


16  THE  PROBLEM  OF  MONOPOLY 

tlio  small  Olio  can  inako  it.  The  cost  of  oversight  is  far 
smallor  per  unit  of  product,  for  a  man  can  oversee  a  large 
mill  about  as  -well  as  he  can  a  small  one;  and,  moreover, 
he  can  use  cheap  labor  and  dear  labor  in  such  ways  as  to 
get  the  most  from  them.  A  small  mill  has  to  have  all- 
round  men  whom  it  can  shift  from  one  employment  to 
another;  but  the  great  shop  has  men  who  are  highly  spe- 
cialized and  do  not  have  to  be  shifted.  It  employs  women, 
and  to  some  extent,  boys;  and  it  effects  economies  which 
are  decisive  in  the  competition  with  small  mills.  Little 
chance  for  survival  has,  as  a  rule,  the  small  establishment, 
except  in  the  sheltered  corners  of  the  field  where  it  can 
cater  to  local  demands  and  take  orders  directly  from  con- 
sumers. If  you  are  making  only  one  article  of  a  kind,  it 
is  cheaper  to  make  it  in  a  small  shop  and  perhaps  even  by 
hand.  There  will  always  be  places  where  the  small  shop 
can  survive;  but  the  big  shop  will  have  the  general  field 
and  that  by  reason  of  its  power  to  make  and  sell  things 
cheaply. 

Now  it  is  not  comfortable  for  the  owner  of  the  small 
shop  to  be  driven  out  of  business  by  the  big  ones;  but  it 
is  good  for  the  public  to  have  that  shop  survive  which  will 
sell  the  goods  at  the  lowest  rate.  In  the  long  run  even  the 
man  who  has  lost  his  position  as  an  independent  producer 
very  often  is  able  to  get  something  to  do  which  is  better 
for  him  than  what  he  had  before.  If  he  is  lucky  enough 
to  become  a  manager  of  a  successful  mill  it  is  better  than 


THE  GEOWTH  OF  CORPORATIONS  17 

to  struggle  along  as  proprietor  of  an  unprofitable  one. 
He  has  really  been  promoted  in  the  industrial  scale,  and 
while  I  am  not  claiming  that  the  man  altogether  enjoys  the 
process  and  welcomes  extermination  as  an  independent 
producer,  I  am  claiming  that  the  general  results  of  the 
survival  of  the  big  shop— if  that  has  come  about  by  the 
honest  process  of  offering  goods  cheaply— are  good  for  the 
public,  and  are  often  not  bad  for  the  man  immediately 
affected.  Unhappily  the  big  shop  does  not  rely  on  such 
fair  competition. 

Unhappily  it  has  other  ways  of  exterminating  the 
small  shop ;  such,  for  instance,  as  getting  special  rates  for 
freight  on  the  railroads  which  the  small  shop  cannot  get. 
The  big  shop  has  nearly  always  been  able  to  get  an  advan- 
tage over  the  small  one  in  the  matter  of  freight  charges 
and  that  single  advantage  is  sometimes  large  enough  to 
decide  the  whole  matter  in  favor  of  the  big  shop. 

Now  some  people  have  drawn  a  comparison  between 
America  and  foreign  countries— for  instance,  Germany— 
in  the  matter  of  trusts  and  have  told  us  that  trusts  are  as 
numerous  in  Germany  as  they  are  in  America  and  that  no 
one  there  finds  any  fault  with  them.  There  is,  however, 
one  enormous  difference  between  the  position  of  a  German 
trust  and  that  of  an  American  one,  in  that  the  German 
Kartel  cannot  get  any  special  favors  from  roads,  while 
American  trusts  can  do  this.  In  addition  to  the  advan- 
tage which  the  big  company  has  by  its  mere  size,  it  has 

3 


18  THE  PROBLEM  OF  MONOPOLY 

a  further  advantage— an  altogether  illegitimate  one— in 
the  reduced  rates  of  freight  which  it  is  able  to  command. 
An  alliance  between  the  railroads  and  a  great  producing 
company  is  certain  to  be  fatal  to  any  effective  rivalry  on 
the  part  of  a  small  one.  After  one  hundred  years  of 
growth  of  big  shops  by  a  perfectly  natural  process,  we 
have  come  upon  a  period  of  consolidation  and  growth  by 
an  abnormal  process ;  and  it  is  this  that  troubles  us. 

The  consolidation  of  competing  shops  comes  about  when 
the  small  ones  have  been  exterminated  except  in  out  of  the 
way  corners  of  the  field,  and  when  the  surviving  large  ones 
compete  with  each  other  so  fiercely  that  no  one  of  them 
can  make  much.  At  such  a  time  competition  works  to  de- 
press prices  even  more  than  it  did  under  earlier  conditions. 
"When  the  struggle  is  between  fifty  great  shops,  all  of  one 
kind  and  all  very  efficiently  managed  and  equipped  with 
the  latest  machinery,  there  is  even  less  chance  for  making 
profits  than  there  was  when  there  were  a  thousand  little 
shops  running  each  in  its  own  local  field.  It  is  a 
struggle  for  custom  in  one  general  market  that  creates  a 
fierce  cutting  of  prices.  In  early  days  a  shop  in  one  cor- 
ner of  the  country  was  not  felt  as  a  dangerous  competitor 
in  another  corner  of  the  country ;  but  now  with  the  output 
of  all  the  shops  so  great,  it  is  possible  for  any  one  of  them 
to  seek  markets  all  over  the  country,  if  not  all  over  the 
world ;  and  in  many  an  industry  we  have  a  product  large 
enough  to  justify  the  owners  in  sending  canvassing  agents 


THE  GEOWTH  OF  COEPOEATIONS  19 

hither  and  yon  over  vast  areas.  The  territories  of  the 
aifferent  companies  overlap  each  other  and  they  have 
had  to  resort  to  every  sort  of  device,  not  merely  to  open 
up  new  territory,  but  to  get  away  territory  from  each 
other. 

Advertising  has  played  a  large  part  in  this  work,  and 
the  traveling  men  have  been  the  most  costly  part  of  the 
advertising.  There  was  a  time  when  in  certain  kinds  of 
wholesale  business  it  was  sufficient  for  a  ''drummer"  to 
visit  the  customer  once  in  three  or  four  months.  Any 
order  that  a  customer  had  to  give  between  the  visits  could 
be  sent  perfectly  well  by  mail,  and  seeing  the  customer 
three  or  four  times  a  year  sufficed  to  retain  his  trade. 
But  the  eager  determination  of  different  producers  to  get 
away  each  other's  customers  caused  some  of  them  to  send 
the  traveling  men  more  frequently,  and  so  it  came  about 
that  they  had  to  visit  every  customer  about  once  in  two 
months.  Still  the  process  went  on  as  they  struggled  to 
get  away  each  other's  territory,  and  at  present  in  many 
lines  of  business,  a  concern  cannot  count  on  holding  its 
trade  unless  its  traveling  men  see  the  customers  every  two 
weeks,  while  weekly  and  semi-weekly  visits  are  not  un- 
known. This  terribly  wasteful  process  is  accompanied  ' 
by  eager  bids  in  the  way  of  discounts  to  customers,  till 
such  competition  cuts  profits  down  to  little  or  nothing. 
As  the  competitors  become  fewer  the  opportunity  for 
uniting  them   in  a   great  consolidation  becomes  better. 


20  THE  PROBLEM  OF  MONOPOLY 

There  is  a  tenfold  desire  to  stop  this  cut-throat  compe- 
tition and  it  is  ten  times  as  easy  as  it  would  once  have  been 
to  do  it.  The  last  quarter  of  the  nineteenth  century  has 
been  the  beginning  of  an  age  of  consolidation ;  but  it  is  a 
type  of  consolidation  unlike  that  which  went  before  it. 
It  does  not  come  about  by  straightforward  and  honest 
competition,  but  comes  rather  by  the  extinction  of  com- 
petition— by  the  uniting  of  competitors  not  only  in  order 
to  save  costs,  but  also  to  keep  up  prices  and  make  larger 
profits.  A  newspaper  founded  to  record  the  progress  of 
machinery,  called  itself  The  Age  of  Steel :  and  this  was  a 
fitting  designation  of  the  century  from  1776  to  1876.  If 
the  trusts  of  to-day  dealt  fairly  with  their  competitors 
and  had  no  advantage  over  them  except  that  which  comes 
from  better  machinery  and  greater  economy,  the  phrase 
would  describe  the  time  we  live  in.  If  the  trust's  advan- 
tages come  from  evading  laws  and  securing  illegitimate 
I  favors  we  shall  be  tempted  to  use  the  descriptive  phrase 
1  giving  to  the  last  word  a  different  spelling.  It  is  a  time 
of  vast  opportunity  for  men  whose  aim  is  to  prey  on  the 
public.  Is  "honesty  the  best  policy?"  In  the  long  run, 
Yes,  provided  that  the  people  take  wise  measures  to  make 
it  so ;  but  in  a  time  of  imperfect  law  and  of  very  lax 
enforcement  of  law  unscrupulousness  has  been  a  lucra- 
tive policy.  The  public  feels  the  effects  of  this  and  work- 
ing people  who  do  not  happen  to  share  any  of  the  monop- 
olistic gains  feel  them.     Political  life  feels  the  blight  of  it 


THE  GEOWTH  OF  COEPOEATIONS  21 

and  there  has  taken  place  in  society  a  moral  transforma- 
tion which  puts  men  on  a  lower  plane  of  character  at  the 
very  time  when  there  have  come  into  use  wealth-creating 
devices  that  ought  to  lift  us  morally  and  intellectually  to 
a  higher  plane. 

All  this  brings  us  clearly  face  to  face  with  a  very 
serious  problem— whether  we  possibly  can  control  the 
great  political  forces  which  economic  forces  have  created^ 
For  the  whole  political  and  moral  evolution  was  inherent  in 
the  machines  that  replaced  the  hand  labor  of  former  times. 
You  would  not  have  had  the  trusts  in  a  regime  of  hand 
labor;  you  would  not  have  had  the  enormous  mills  that 
united  to  form  the  trusts.  It  is  the  machine  that  has  made 
the  size  of  a  mill  so  important  and  has  made  it  impossible 
for  any  but  the  big  one  to  survive.  The  fact  that  only  a  \ 
few  did  survive  first  caused  those  few  to  compete  so 
vigorously  with  each  other  that  they  made  almost  no 
profits,  then  enabled  them  to  save  their  profits  by  consol- 
idating and  finally  incited  them  to  seek,  besides  legitimate 
profits  to  which  they  had  a  perfect  right,  an  income  not 
founded  in  justice  and  one  to  which  a  harsh  term  may 
correctly  be  applied.  It  is  fair  to  say  that  this  whole 
enormous  transformation,  which  runs  through  the  plan 
of  modern  industry,  and  through  the  relations  of  employ- 
ers and  employed,  which  enters  into  and  perverts  our 
political  life,  and  even  lowers  the  moral  tone  of  society, 
was  inherent  in  the  original  steam  engine  which  Watt 


22  THE  PROBLEM  OP  MOXOrOLY 

ninnufaoturod  in  Eiiijland  more  than  a  century  and  a 
quarter  ago.  It  was  all  brewing  in  that  tea-kettle  which 
as  a  boy  he  sat  and  watched,  noting  the  force  of  the  steam 
as  it  raised  the  lid  and  let  it  fall.  He  saw  that  the  force 
might  be  put  to  great  account  in  driving  such  primitive 
machinery  as  he  knew  of ;  but  he  was  far  from  foreseeing 
the  transforming  effects  of  the  innumerable  machines 
which  his  engines  were  destined  to  make  available.  No 
one  for  a  hundred  years  thereafter  realized  their  full 
economic  and  political  consequences.  The  boy  may  have 
seen,  as  he  watched  the  kettle,  the  outlines  of  a  big  pump- 
ing engine  working  with  greater  economy  than  any  such 
engine  had  thus  far  worked ;  he  did  not  see  the  big  textile 
mills  that  were  soon  to  be  working  in  England.  He  did 
not  see  the  enormous  steamships  of  to-day.  He  did  not 
see  Stephenson's  locomotive,  not  to  speak  of  the  great  lines 
of  railroads  that  were  destined  to  be  built  on  unoccupied 
continents  and  scatter  the  surplus  multitudes  of  the  earth 
over  them.  Very  far  was  he  from  seeing  the  ulterior 
effects  of  the  growth  of  the  big  shops— the  transformation 
of  social  life,  the  perverting  of  political  life,  the  submit- 
ting of  democratic  institutions  to  a  terrible  strain,  and  the 
uncertain  problem  which  we  find  ourselves  trying  to  solve : 
whether,  after  all,  the  people  can  continue  to  do  their 
own  governing.  Would  you  say  that  the  steam  that 
raised  the  lid  of  a  kettle  and  let  it  fall  threatened  demo- 
cratic institutions?    At  the  outset  you  would  not  have 


THE  GEOWTH  OF  COEPOEATIONS  23 

said  so,  but  now  you  see  that  it  did.  From  that  economic 
application  of  physical  force  influences  have  followed 
which  have  put  an  end  to  small  industry  and  to  the  old 
type  of  democracy.  Can  we  save  our  democracy  under  a 
new  form  ?  Can  we  control  the  genie  that  has  come  out  of 
the  box  we  have  opened?  That  depends  on  the  question 
whether,  as  a  people,  we  can  regulate  and  guide  the  gigan- 
tic forces  that  have  come  into  activity.  That  is  the  prob- 
lem which  we  have  mainly  to  consider:  what  can  we  do 
with  modern  monopolies?  Can  we  do  anything  with 
them?  Will  they  rule  us  or  shall  we  rule  them?  It  is 
essential  to  perceive  that  it  is  not  the  problem  whether,  if 
it  comes  to  an  out  and  out  fight,  we  can  or  cannot  crush 
the  monopolies.  That  we  can  do  if  we  must;  for  it  is 
usually  easier  to  smash  a  thing  than  to  shape  it  to  your 
mind,  and  if  there  really  were  an  ultimate  test  of  strength 
—if  we  found  the  monopolies  out  and  out  unendurable,  if 
we  found  them  really  threatening  our  liberties  and  con- 
cluded that  the  only  thing  we  could  do  was  to  destroy 
them,  we  could  and  should  do  it.  The  people  have  at 
different  times  in  history  succeeded  in  doing  a  great  deal 
of  such  destroying,  "We  know  well,  however,  that  that  is 
not  what  in  our  own  interest  we  ought  to  do.  We  know 
already  that  the  real  problem  for  us  is  to  get  the  benefit 
of  the  producing  power  which  these  enormous  consolida- 
tions have,  to  make  them  work  for  us  instead  of  preying 
upon  us.    We  need  so  to  control  these  gigantic  monsters 


24  THE  PROBLEM  OF  MONOPOLY 

as  to  transform  them  into  beasts  of  burden  instead  of  pred- 
atory animals  that  make  our  living  insecure.  Can  we  do 
that  ?  Can  we  throw  to  the  winds  the  idea  of  doing  a  de- 
stroying work  and  save  what  is  good  and  stamp  out  what 
is  evil  in  these  great  consolidations  ?  Can  we  make  benefi- 
cent the  very  things  which  threaten  our  liberties  ?  Can  we 
make  their  economic  action  beneficent,  inducing  low  prices 
and  high  wages  instead  of  high  prices  and  low  wages? 
That  is  the  problem  that  we  have  before  us  and  momen- 
tous though  it  be,  it  is  not  insoluble. 


CHAPTER  II 

THE  SOURCES  OF  THE  CORPORATIONS'  POWER  FOR  EVIL 

It  is  time  to  inquire  what  can  be  done  to  curb  the  power 
of  monopoly  and  to  make  it  useful  as  a  producing  force. 
The  productive  efficiency  of  the  monster  corporation 
should  enable  us  to  make  goods  more  cheaply  than  we  can 
otherwise  make  them,  and  to  export  them  to  foreign  mar- 
kets. The  trusts  can  help  us  to  become  a  power  in  the  com- 
mercial world.  This  service  we  can  get  from  them  if  we 
are  successful  in  managing  them;  and  we  do  not  want  to 
sacrifice  it  by  unduly  crippling  them.  Nevertheless,  it 
will  take  a  great  deal  of  managing;  for  the  trusts  will 
certainly  not  look  with  favor  on  anything  whatever  that 
curtails  their  power  to  raise  prices.  They  have  influence 
enough  at  present  to  defeat  such  efforts  as  are  making  to 
enlist  the  government  vigorously  in  the  work  of  regula- 
tion. Among  the  properties  which  they  own  is  a  certain 
class  of  legislators. 

Now  before  we  proceed  with  the  inquiry  how  we  can 

curb  the  power  of  monopolies,  it  is  worth  while  to  make 

very  sure  that  this  power  needs  curtailing.    Many  of  us  can 

recall  the  time  when  it  was  claimed  by  many  an  honest 

business  man  that  trusts  might  safely  be  let  alone.    What 

25 


26  THE  TKOBLEM  OF  MONOPOLY 

harm  wore  thoy  doing?  "Woro  not  prices  low  enough? 
"Were  not  wages  high  enough  ?  Were  not  we  getting  along 
well  in  spite  of  the  monsters  ?  Was  not  the  price  of  kero- 
sene oil  as  low  as  it  ever  had  been  and  was  not  the  Stand- 
ard Oil  Company  as  able  to  do  evil,  if  it  wished  to  do  it, 
as  a  corporation  could  ever  be  ?  If  trusts  make  products 
dear,  why  should  not  the  price  of  oil  go  up  ?  It  did  indeed 
occur  to  us  that  the  real  question  is  not  whether  oil  was  as 
cheap  as  it  formerly  had  been,  but  whether  it  was  as 
cheap  as  it  might  at  the  later  time  have  been  if  there  had 
not  been  any  trust.  If  the  Standard  Oil  Company  did  not 
stop  the  outflow  of  raw  oil  from  the  wells,  it  was  quite  nat- 
ural that  the  price  of  both  raw  oil  and  refin^jd  should  go 
down,  even  though  the  monopoly  was  getting  a  stiff  toll 
for  refining  and  carrying  it.  The  Standard  Oil  Company 
got  the  credit  for  making  the  price  of  oil  low  when,  in 
reality,  it  was  the  power  of  nature  that  did  it  by  thrusting 
on  the  market  an  abu»d,^anee  of  the  raw  material.  Now 
that  oil  retails  at  fift^n  cents  a  gallon  this  old  argument 
is  no  longer  heard.  It  is  the  natural  tendency  of  all 
monopolies  to  raise  the  prices  of  their  goods.  They  shut 
up  some  mills  in  order  to  keep  dowTi  the  supply  and.  make 
a  large  profit  on  whatever  they  offer  for  sale. 

What  would  a  trust  do  if  it  were  a  complete  monopoly? 
Of  course  we  can  look  into  recent  history  and  see  what 
the  trusts  have  done  and  we  shall  then  find  that  they 
actually  have  put  up  prices,  and  that  they  have  done  it 


THE  SOUECES  OF  POWEE  FOE  EVIL  27 

by  curtailing  production;  but  in  the  nature  of  tbe  case 
should  not  we  have  known  that  they  certainly  would  do 
that?  What  is  a  monopoly  for  ?  Why  does  any  one  want 
the  exclusive  privilege  of  selling  anything?  If  I  am  the 
only  one  who  has  some  necessary  article  for  sale,  and  you 
have  to  buy^f rom  me  or  go  without  it,  and  if  I  am  working 
**for  my  own  pocket  all  the  time,"  should  not  I  necessarily 
charge  you  a  rather  round  price  for  what  you  get  ?  That 
Ts  Tinman  nature  and  we  have  had  a  chance  to  observe 
that  there  is  a  great  deal  of  human  nature  in  the  managers 
of  trusts  and  that  not  all  of  it  is  even  of  as  creditable  a 
sort  as  that  which  merely  charges  for  its  goods  what  the 
traffic  will  bear.  A  trust  will  get  as  high  prices  as  it  can 
with  safety  for  itself,  and  the  problem  is,  how  high  can 
prices  be  put  and  yet  be  altogether  safe?  Why,  if  the 
trust  were  a  perfectly  secure  monopoly,  so  that  nobody 
else  could  possibly  enter  its  field,  it  would  have  one  very 
simple  rule  for  making  prices:  it  would  make  them  so 
high  that  the  net  profit  of  the  business  would  be  as  large 
as  it  possibly  could  be. 

If  we  put  the  prices  up,  up,  and  again  up,  we  begin 
to  find  that  the  purchases  of  the  goods  are  falling  off  so 
seriously  that  it  will  not  pay  to  put  them  aiay  higher. 
Before  the  falling  off  of  the  purchases  becomes  very 
serious  prices  can  become  high  enough  to  afford  a  very 
fat  profit.  A  perfectly  secure  monopoly  would  not  raise 
prices  indefinitely,  but  it  would  tax  the  public  to  an  in- 


28  THE  TKOBLEM  OF  MOXOrOLY 

siifferable  degree.  Such  monopolies  as  have  existed  by 
the  assistance  of  the  government  have  charged  exorbi- 
tant prices ;  and  it  is  the  nature  of  the  trust  to  do  this  if 
its  position  is  secure. 

Now,  if  prices  are  made  high,  does  not  that  necessarily 
mean  that  wages  are  made  low  ?  If  the  trust  shuts  up  mills 
in  order  to  raise  the  prices  of  its  goods  can  anything  hap- 
pen except  that  the  men  who  are  in  those  mills  have  to  go 
elsewhere  to  seek  employment?  Will  not  that  somewhat 
increase  the  competition  for  employment  in  other  fields? 
Wages  in  the  other  fields  will  be  somewhat  lower ;  and  that 
fact  may  well  make  us  unwilling  to  accept  the  verdict  of 
observers  who  have  gone  to  the  villages  in  which  the  mills 
of  the  trusts  are  located  and  asked  the  employees  there 
whether  they  are  satisfied  with  trusts  or  not.  Not  long 
ago  such  an  inquiry  was  made  and  the  results  were  pub- 
lished. A  man  went  about  visiting  villages  in  which  were 
mills  belonging  to  trusts  and  conversing  with  the  men 
who  were  employed  in  those  mills.  He  found  them  gen- 
erally satisfied  with  the  treatment  they  were  getting.  The 
trust  paid  good  wages,  provided  good  places  to  live  in 
and,  on  the  whole,  was  a  good  employer.  The  facts  might 
not  be  quite  so  favorable  now;  but  at  that  time  the  em- 
ployees, for  the  most  part,  liked  the  trusts  and  considered 
that  they  had  more  constant  employment  and  somewhat 
higher  wages  under  them  than  men  got  under  other 
employers.     Should  we,  however,  be  satisfied  with  evidence 


THE  SOURCES  OF  POWER  FOR  EVIL  29 

of  this  nature  as  a  complete  proof  that  the  trust  is  good 
for  wage-earners?  Clearly  not.  What  it  shows  is  that, 
inside  of  the  domain  of  the  trust,  there  may  be  good  places 
in  which  to  work,  but  that  outside  of  it  the  field  cannot 
possibly  be  as  good  as  it  would  otherwise  be;  for  if  the 
trust  shuts  up  some  of  its  own  mills  and  sends  men  else- 
where, they  certainly  cannot  earn  as  much  as  they  have 
been  earning.  It  is,  therefore,  the  nature  of  monopoly  to 
reduce  wages  as  well  as  to  raise  prices.  The  doubtful 
problem  in  regard  to  the  modern  trust  is  whether  it  is  a 
complete  monopoly  or  not.  Does  it  or  does  it  not  entirely 
exclude  competition  from  its  field?  This  is  the  vital 
question. 

These  corporations  are  not  necessarily  monopolies,  and 
by  wise  action  they  can  be  prevented  from  influencing 
either  prices  or  wages  for  the  worse.  It  is  possible  to 
suggest  laws,  which,  if  made  and  enforced,  would  take 
the  monopolistic  character  out  of  the  trust  while  leaving 
unimpaired  its  great  power  of  production.  That  policy 
would  leave  it  in  a  condition  to  make  things  cheaply,  ex- 
port them  freely  and  give  us  a  certain  dominance  in  the 
markets  of  the  world;  but  it  would  take  away  the  power 
to  drive  competition  out  of  the  field.  As  a  matter  of  fact, 
the  trust  laws  that  for  the  most  part  we  have  upon  the 
statute  books  are  a  latter-day  repetition  of  some  laws  that 
hundreds  of  years  ago  were  in  force  in  England  and  were 
designed  to  prevent  the  formation  of  co-partnerships  in 


30         THE  PROBLEM  OF  MONOPOLY 

business.  The  time  was  when  the  public  in  England  was 
as  much  afraid  of  the  formation  of  business  partnerships 
as  the  public  to-day  is  afraid  of  the  formation  of  trusts. 
Most  of  the  manufacturing  of  that  early  time  was  done  in 
little  shops,  where  a  master  workman  gathered  a  few 
apprentices  and  journeymen  about  him,  worked  with  them 
himself  and  put  his  own  products  on  the  market.  Each 
master  workman  was  independent  and  each  one  of  them 
sold  his  goods  in  a  limited  area.  Only  a  few  exported 
them.  Some  who  happened  to  be  located  on  navigable 
streams  and  had  larger  shops  than  others,  sent  their  goods 
to  a  considerable  distance,  and  some  sent  them  out  of  the 
country;  but  for  the  most  part  the  trade  of  these  shops 
was  limited  to  the  district  in  which  they  lay.  "Now," 
said  the  English  law  maker,  ''if  two  or  three  of  these 
master  workmen  club  together,  they  will  extinguish  the 
competition  that  formerly  existed  between  them  and  will 
be  able  to  charge  us  unjust  prices."  But  partnerships 
were  formed  in  spite  of  the  law,  and  it  was  discovered  that 
the  prices  of  goods  did  not  go  up.  In  the  first  place,  not 
all  the  master  workmen  in  the  village  formed  partnerships, 
and,  moreover,  as  similar  goods  could  be  bought  in  neigh- 
boring villages,  no  one  was  oppressed.  The  partnership 
did  not  make  prices  high,  and  the  conclusion  was  reached 
that  it  was  safe  freely  to  allow  them. 

Now  the  position  of  the  great  corporations  in  a  country 
like  the  United  States  is  much  like  that  of  a  master  work- 


THE  SOURCES  OF  POWER  FOR  EVIL  31 

man  in  a  village,  who  sells  his  goods  only  in  the  neighbor- 
hood. Most  of  the  corporations  in  America  sell  the  greater 
part  of  their  products  within  the  country.  Some  of  them, 
indeed,  are  rapidly  increasing  their  export  trade,  but  the 
greater  portion  of  what  is  produced  in  the  country  is 
still  sold  at  home.  Suppose,  then,  that  we  have  fifty  mills 
of  a  kind— and  in  some  lines  of  business  there  are  many 
more  than  that— the  danger  is  that  they  will  form  great 
partnerships  and  will  have  the  country  at  their  mercy. 
But  it  may  well  be  that  the  same  thing  will  happen  within 
the  broad  area  of  the  country  that  formerly  happened 
within  the  limited  area  of  the  village :  there  may  survive 
a  number  of  corporations  outside  of  the  trusts,  and  that 
might  help  to  keep  down  prices.  Moreover,  it  might  be 
possible  for  us  to  go  for  goods  into  neighboring  markets 
and  that  would  help  to  control  prices;  and  so  it  might 
be  possible  to  have  large  trusts  existing  and  prices  still 
remaining  low.  If  this  were  the  outcome  no  one  would 
need  to  trouble  himself  about  laws  to  break  up  trusts. 

We  come  here  to  a  really  serious  difficulty.  Suppose  that 
a  partnership  is  formed  in  a  village,  that  the  master  work- 
men are  all  gathered  into  it,  that  some  other  master  work- 
man moves  into  that  village  and  that  they  burn  up  the 
newcomer's  shop,  treat  him  to  the  ''slugging"  argument, 
and  find  effective  ways  of  ** persuading"  him  to  go  some- 
where else.  Then  there  is  a  real  monopoly.  Now  the 
problem  and  the  only  grave  problem  in  the  case  of  our 


32  thl:  pkoblem  of  monopoly 

inodorn  consolidations  is:  do  the  trusts  exorcise  any  such 
power  as  this  ?  Can  they,  in  any  sense,  club  off,  frighten 
off,  or  in  their  own  rough  way,  send  off,  the  competitors 
who  enter  the  fieki?  If  the  market  is  open  to  competitors 
and  if  they  are  all  the  time  coming  in  spite  of  the  trust, 
prices  will  be  low ;  but  if  competitors  do  not  dare  to  come, 
if  the  few  that  do  come  have  severe  lessons  taught  them, 
and  others,  in  prudence,  stay  out,  the  trust  has  a  clear 
possession  of  the  field.  Then  prices  will  not  be  low. 
"Wages  may  be  so,  but  not  prices.  It  all  hangs  on  the 
question  whether  competition  does  survive  in  spite  of 
the  trusts— whether  they  have  any  weapons  in  their 
hands  whereby  they  can  extinguish  competition  when  it 
arises. 

As  a  matter  of  fact  they  do  have  them.  They  can  make 
it  exceedingly  uncomfortable  for  the  independent  com- 
petitor. The  first  and  most  serious  weapon  that  they  have 
is  secret  arrangements  with  railroad  companies.  The 
oldest  and  strongest  trust  in  the  United  States  was  built 
up  from  the  beginning  by  virtue  of  rebates  on  freight 
which  its  competitors  could  not  get.  If  the  trust  to-day 
can  get  materially  better  terms  from  railroads  than  one 
of  its  competitors  is  able  to  get,  it  will  go  hard  with 
that  competitor.  The  trust  will  have  him  at  its  mercy. 
It  may  tolerate  his  existence  if  it  thinks  that  it  will  not 
pay  to  attack  him  so  long  as  he  does  a  small  business, 
but  if  the  competitor  is  doing  a  large  business,  then  an 


THE  SOUECES  OF  POWER  FOR  EVIL  33 

attack  upon  him  will  pay  quite  well,  and  I  would  not  like 
to  be  financially  interested  in  that  competitor's  success. 
The  mere  fact  that  the  trust  can  get  rates  which  com- 
peting corporations  cannot  get  is  often  sufficient  to  enable 
the  trust  to  crush  competition  at  will. 

That  does  not  forever  end  it.  "We  are  trying  to  deal 
with  railroad  problems  and  are  sometimes  sanguine  enough 
to  think  that  there  will  be  a  golden  age  in  which  we  shall 
manage  the  railroads  instead  of  having  them  manage  us. 
I  confess  that  I  live  in  that  hope  myself,  but  do  not  look 
for  great  success  along  the  line  in  which  we  are  now  oper- 
ating. "We  are  trying  to  prevent  discriminations  of  rates 
upon  the  railroads,  which  are  one  of  the  chief  means  of 
strengthening  the  power  of  trusts,  but,  as  we  shall  later 
see,  we  are  leaving  the  roads  in  a  position  which  affords 
a  great  incentive  to  evade  the  law.  We  shall,  in  due  time, 
see  how  this  incentive  may  be  removed. 

Favors  from  the  carriers  are  not  the  only  means  of 
supporting  the  power  of  monopolies.  The  trust,  even  if 
it  paid  the  same  freight  rates  that  its  rivals  pay,  would 
have  a  terrible  weapon  in  a  competitive  war  with  any 
small  corporation  whose  operations  were  confined  to  a 
portion  of  the  country.  Suppose  I  am  selling  goods  only 
in  New  England,  and  I  come  there  into  competition  with 
a  trust  which  is  selling  them  all  over  the  United  States, 
and  even  exporting  them  to  other  parts  of  the  world.  The 
trust  is  annoyed  at  my  competition  and  begins  to  put 


84  THE  PEOBLEM  OF  MONOPOLY 

down  prices  in  New  England  while  it  keeps  them  up  every- 
where else.  I  do  not  have  any  other  market  to  sustain 
me  and  I  follow  the  prices  of  the  trust  down,  down  towards 
cost.  If  I  do  not  make  overtures  to  the  trust  or  offer  to 
sell  out  to  it,  the  prices  are  likely  to  go  below  cost;  and 
after  a  little  discipline  of  that  sort  I  shall  go  out  of  busi- 
ness. The  trust  will  have  lost  a  little  money  in  driving  me 
out  of  business ;  it  may  have  sold  at  a  sacrifice  a  few  of  its 
goods  in  the  district  in  which  I  am  operating;  but  it  has 
been  making  money  all  over  the  rest  of  the  country  and 
getting  rich,  while  I  have  been  seeing  my  capital  slip  away 
from  me.  The  power  of  local  discrimination,  the  ability  to 
sell  goods  cheaply  here  and  at  high  rates  elsewhere,  is  a 
dangerous  power  in  the  hands  of  any  great  corporation 
which  is  operating  in  a  great  market.  That  of  itself  has 
again  and  again  been  used  to  crush  out  the  competition  of 
small  but  flourishing  and  worthy  corporations  operating  in 
local  parts  of  the  great  field. 

That  is  not  all.  The  trust  has  the  power  to  say  to  any 
purchaser  of  its  goods :  ' '  You  must  buy  your  goods  alto- 
gether of  me ;  if  you  buy  goods  from  anybody  else  we  will 
do  two  things,  either  one  of  which  is  sufficient  to  crush 
you.  We  will  refuse  to  let  you  have  any  of  our  goods  and 
will  give  all  of  our  goods  to  a  rival;  and,  if  this  is  not 
enough,  we  will  instruct  this  rival  whom  we  are  setting  up 
against  you,  to  sell  goods  so  cheap  that,  no  matter  from 
whom  you  buy  them,  you  cannot  make  a  dollar.    You  will 


THE  SOUECES  OF  POWER  FOE  EVIL  35 

have  to  lose  many  dollars  on  that  part  of  your  business." 
Here  is  somebody  who  has  been  buying  goods,  let  us  say, 
by  way  of  illustration,  from  the  American  Tobacco  Com- 
pany, and  a  rival  producer  has  come  in  whom  the  merchant 
likes  to  patronize.  He  buys  goods,  for  a  time,  from  the 
rival  and  an  agent  of  the  trust  sends  him  a  note  to  the 
effect  that  he  must  not  buy  any  more  from  that  rival 
corporation;  that,  if  he  does  so,  the  trust  will  give  all  of 
its  own  goods,  some  of  which  the  merchant  is  obliged  to 
have,  to  another  agent.  That  alone  will  probably  bring 
the  dealer  to  terms.  Quite  likely  some  of  the  articles 
which  the  trust  controls  are  sold  under  brands  that  give 
them  a  great  market.  The  public  insists  on  having  these 
brands,  and  the  man  who  does  not  keep  them  is  fatally 
handicapped.  The  power  to  make  a  "factor's  agree- 
ment," giving  to  certain  dealers  either  the  exclusive 
handling  of  the  trust's  goods  or  special  discounts  which 
others  cannot  get,  is  an  effective  weapon  in  the  hands  of 
the  great  corporation.  If  it  is  used  in  the  case  of  most  re- 
tailers an  independent  producer  will  scarcely  find  any- 
where a  market  for  his  products. 

This,  again,  is  not  all.  Big  corporations  have  further 
resources  for  warfare  against  small  rivals.  Sometimes 
they  make  many  kinds  of  goods,  while  a  rival  makes  only 
a  few.  If,  then,  a  trust  cuts  prices  on  the  few  varieties 
which  its  rival  makes  but  charges  a  large  profit  on  the 
other  kinds,  it  can  make  money  itself  while  it  is  extermi- 


36  THE  PKOBLEM  OF  MONOPOLY 

Dating  its  opponent.  The  small  producer  must  meet  the 
cut  in  prices  on  all  ihc  goods  that  he  sells,  and  that  will 
soon  make  an  end  of  him.  "When  cut-throat  competition 
takes  the  shape  of  putting  prices  very  low  on  one  or  two 
things,  which  are  all  that  a  small  manufacturer  makes,  it 
is  not  necessary  to  resort  to  the  factor's  agreement  at  all. 
That  is  a  convenient  further  weapon  if  the  trust  chooses 
to  bring  it  into  requisition ;  but  it  does  not  need  to  use  it. 
In  most  cases  the  trust  can  crush  a  competitor  without  it. 
Let  the  price  go  down  on  all  the  goods  which  a  rival  makes 
and  stay  up  on  most  of  the  goods  which  the  trust  makes, 
and  the  thing  is  done. 

In  these  various  ways  it  has  come  about  that  the  field 
is  not  a  safe  one  for  a  competitor  to  enter  and  the  trust 
has  the  most  of  it  to  itself.  It  is  able  to  sustain  prices  at 
such  a  level  that,  if  the  field  were  safe,  many  new  producers 
would  be  lured  into  it,  and  we  should  have  all  the  compe- 
tition that  would  be  useful  or  desirable.  The  trust  can 
get  a  monopolistic  price  because,  by  virtue  of  these  differ- 
ent clubs  which  it  holds  in  its  hands,  it  can  drive  out, 
frighten  out,  worry  out  or  kill  off  any  competitor  who  may 
be  bold  enough  to  enter  the  field. 

Now  this  gives  us  a  starting  point  for  the  inquiry: 
"What  sort  of  legislation  do  we  want  if  we  are  going  to 
keep  the  trust,  make  it  a  useful  thing  and  take  away  its 
power  for  evil  1  It  so  happens  that  almost  all  the  legisla- 
tion we  have— and  we  have  a  great  deal— is  designed  to 


THE  SOUECES  OF  POWEE  FOE  EVIL  37 

break  up  the  trusts  into  smaller  corporations.  It  is  a 
natural  reassertion  of  the  old  common-law  principle  that 
a  combination  in  restraint  of  trade  is  contrary  to  the 
public  interest  and  unlawful.  It  is  based  on  the  common- 
law  antagonism  to  monopoly  and  on  a  hasty  inference 
that  these  big  consolidations  are  necessarily  monopolies. 
If  they  were  so,  the  laws  would  be  founded  upon  the  right 
principle  and  ought  to  be  supported.  The  anti-trust  laws 
of  such  states  as  Arkansas  and  Texas,  which  go  to  the  very 
limit  of  severity,  ought  to  be  duplicated  in  every  state  of 
the  Union ;  and  they  ought  to  be  supplemented  by  federal 
laws  of  equal  severity.  Experience  is  putting  the  country 
through  a  rapid  and  efficient  course  of  instruction ;  and  in 
due  time  it  will  be  generally  known  that  suppressing  every 
kind  of  combination  is  far  from  being  desirable,  though  it 
were  never  so  practicable.  If  we  could  break  up  a  cor-  A 
poration  that  has  a  billion  dollars'  worth  of  capital  into  a  j 
hundred  companies  with  ten  million  dollars  each,  we  i 
should  not  solve  the  problem  that  is  before  us.  In  the 
first  place  there  would  still  be  ways  by  which  the  com- 
panies could  come  to  an  understanding  with  each  other; 
and  in  the  second  place  the  new  condition  would  not  give 
to  the  producing  companies  as  much  efficiency  in  the  way 
of  serving  the  public  as  they  might  easily  develop  if  they 
were  united  in  a  firm  consolidation.  We  want  to  keep  all 
that  efficiency  and  increase  it.     In  somewhat  reducing  a 


432973 


38  THE  PEOBLEM  OF  MONOPOLY 

power  for  evil  we  do  not  want  to  abate  a  jot  of  the  power 
for  good  that  is  bound  up  with  it. 

The  difficult  thing  which  we  should  do  and  must  do  is 
to  preserve  all  the  power  for  good  and  to  crush  the  power 
to  do  evil.  We  must  compel  these  monsters  of  industry 
to  give  us  as  low  prices  as  free  competition  would  give  us. 
We  must  make  them  sustain  wages  at  an  even  higher  level 
than  they  would  reach  if  no  trust  existed.  What  we  can 
already  see  is  that  if  it  were  only  possible  for  competitors 
to  enter  the  trust's  field  and  not  encounter  commercial 
slugging  the  trusts  could  not  greatly  tax  us  by  their  ex- 
orbitant prices ;  and  it  will  soon  be  equally  clear  that  they 
would  not  depress  wages.  The  prices  of  the  goods  a  man 
buys  and  the  amount  of  pay  that  he  gets  for  his  labor 
would  be  legitimate;  and  he  would  have  before  him  an 
outlook  for  more  comfortable  living  as  the  years  shall  go 
by.  This  great  boon  is  contingent ;  for  it  depends  on  our 
own  wisdom  in  legislating  and  on  our  determination  in 
enforcing  the  laws  we  make. 


CHAPTER  III 

GEEAT  COEPOKATIONS  AND  THE  LAW 

Natural  prices  are  cost  prices.  Competition  tends  to 
secure  what  the  interest  of  the  public  requires :  that  goods 
should  be  sold,  in  the  long  run,  as  cheaply  as  they  can  be 
sold  and  still  afford  wages  for  all  the  labor  that  is  used  in 
making  them,  fair  salaries  for  all  the  managers  of  the  busi- 
ness and  simple  interest  on  all  capital  that  is  used.  Busi- 
ness losses  have,  of  course,  to  be  taken  into  account ;  they 
come  irregularly  and  the  business  has  to  provide  a  sinking 
fund  from  which  to  meet  them  before  the  real  returns  of 
the  business  begin.  The  sum  I  lay  aside  this  year  and  next 
with  the  expectation  that  it  will  just  suffice  to  meet  a  loss 
coming  in  the  year  after,  is  no  part  of  my  income  for  the 
first  two  years.  Net  returns,  in  the  absence  of  any  special 
advantage  which  a  business  may  enjoy,  tend  to  settle  down 
to  the  standard  above  named— enough  to  pay  wages,  in- 
cluding salaries,  and  interest. 

A  trust  that  had  a  secure  monopoly  in  its  line  of  busi- 
ness would  get  more.  It  would  tax  the  public  by  charg- 
ing unnaturally  high  prices.  But  a  trust  that  had  no 
secure  monopoly  might  conceivably  sell   goods  at  even 

lower  prices  than  a  large  number  of  small  competing 

89 


40  THE  PKOBLEM  OF  MONOPOLY 

concerns  -would  ilo.  It  niij^lit  be  compelled,  in  its  own 
interest,  to  put  the  prices  of  its  products  below  what  it 
would  cost  small  shops  to  make  them  and  very  near  to 
what  the  making  would  cost  in  large  shops. 

It  all  depends  on  whether  the  trusts  have  the  power 
to  deter  competitors  from  entering  their  field ;  if  they  have 
this  power  they  will  get  monopolistic  prices,  but  if  they 
do  not  they  may  even  establish  the  most  favorable  of 
competitive  prices — those,  namely,  which  will  pay  only 
wages,  salaries  and  interest  in  large  and  well-appointed 
establishments. 

A  trust's  competitors  in  these  days  are  apt  to  be  well 
equipped.  This  is  not  a  universal  rule,  for  some  anti- 
quated mills  may  be  allowed  to  run,  usually  in  out  of  the 
way  corners  of  the  field ;  but  a  new  mill  that  is  built  to 
compete  with  a  trust  in  its  own  market  would  be  auda- 
cious indeed  if  it  did  not  have  the  latest  devices  that  are 
known  for  making  goods  economically.  By  virtue  of  its 
consolidating  of  many  such  establishments  a  trust  that  has 
been  long  established,  and  has  been  managed  with  a  view 
to  economical  production  and  not  speculation,  may  come 
to  the  point  where  it  can  make  the  goods  even  more  cheap- 
ly. If  so,  it  can  sell  them  at  what  it  costs  the  rival  mill  to 
make  them  and  still  have  a  net  profit.  Such  a  profit  due 
to  the  sheerest  economy  would  be  the  most  honestly  earned 
of  all  profits,  for  it  would  come  about  solely  by  virtue  of 
supreme  efficiency  in  serving  the  public.     The  trust,  under 


GEEAT  COEPORATIONS  AND  THE  LAW       41 

these  conditions,  would  be  doing  what  no  other  agency 
could  do  in  the  direction  of  making  products  cheap. 

The  difference,  then,  between  trusts  that  can  destroy 
their  rivals  as  fast  as  they  appear  and  those  that  cannot 
do  this  is  world  wide.  It  makes  the  entire  difference 
between  a  system  of  monopoly  which  would  be  worse  than 
feudal  in  its  exactions  and  a  system  that,  in  spite  of  vast 
consolidations,  preserves  the  essential  qualities  of  a  free 
system  open  to  all  enterprising  employers,  and  affording 
both  fair  prices  to  consumers  and  fair  wages  to  workmen. 
There  is  everything  good  in  sight  for  a  country  which  can 
and  will  thus  preserve  the  essentials  of  economic  freedom ; 
and  there  is  everything  evil  for  one  which  can  not  or  will 
not. 

We  have,  in  this,  a  clear  indication  as  to  what  is 
desirable  in  trust  legislation.  What  is  practicable  is  a 
further  question,  but  there  is  no  uncertainty  as  to  what 
we  should  secure  if  we  can.  We  should  stop  "predatory" 
acts  of  the  trust.  We  should  give  its  rivals  a  fair  chance  to 
survive,  provided  that  they  demonstrate  their  right  to 
survive  by  producing  goods  cheaply.  As  to  the  practica- 
bility of  securing  this,  the  best  test  is  afforded  by  experi- 
ence, and  it  is  therefore  clear  that,  before  we  carry  much 
further  the  trust-crushing  policy— before  we  make  any 
desperate  effort  to  "smash"  the  trusts  or  to  divide  them 
and  to  break  them  up  into  many  little  corporations,  it  is 
in  the  highest  degree  necessary  to  ascertain  by  a  thorough 


42  THE  PROBLEM  OF  MONOPOLY 

experiment  whether  we  cannot  preserve  their  existence 
while  destroying  their  power  for  evil,  retaining  their 
power  for  good. 

If  we  try  this,  the  very  first  thing  we  have  to  solve  is 
the  railroad  problem.  The  favor  of  a  common  carrier  is 
as  dangerous  to  the  public  as  it  is  welcome  to  the  trusts. 
"We  have  to  prevent  the  railroads  from  giving  low  rates 
of  freight  to  the  enormous  corporations  and  charging 
high  ones  to  other  corporations,  or  to  individuals.  We 
have  to  make  the  common  carriers  in  our  country  treat 
the  public  fairly  and  equally,  as  they  do  in  those  countries 
in  which  the  railroads  are  the  property  of  the  state.  Now 
when  I  have  said  that,  I  have  suggested  at  once  that  one 
way  of  getting  what  we  want  would  be  to  take  the  rail- 
roads directly  into  the  hands  of  the  state;  and  a  great 
many  people  whose  opinions  I  respect  are  in  favor  of 
doing  this.  I  should  not  be  in  favor  of  doing  it  until  I 
had  tried  another  plan.  It  would  be  only  after  every 
promising  expedient  had  failed  that  I  should  think  it 
necessary  to  resort  to  this  one  of  public  ownership.  If 
there  were  no  other  way  of  securing  for  all  competitors 
fair  and  equal  treatment  by  the  railroads,  if  we  had  tried 
every  intelligent  experiment  in  the  way  of  railroad  regu- 
lation, if  we  had  experimented  long  and  carefully,  but  quite 
without  success,  then  the  vote  of  the  people  of  the  United 
States  would  undoubtedly  be  to  take  the  railroads  into 
their  possession.    Nevertheless  there  are  certain  things 


GEEAT  COEPORATIONS  AND  THE  LAW       43 

that  we  can  do  before  we  come  to  that,  and  there  is  reason 
to  believe  that  these  other  measures  will  succeed,  if  they 
are  tried  intelligently  and  earnestly. 

It  is  very  hard  at  present  to  prevent  a  railroad  from 
discriminating  in  its  charges.  If  a  line  can  make  a  secret 
contract  with  a  producer  who  has  an  enormous  amount  of 
freight  to  ship  and  can  get  that  particular  freight,  which 
is  so  important,  into  its  own  control,  it  has  done  a  very 
important  service  to  its  stockholders,  and  the  temptation 
to  do  it  in  a  secret  way  and  in  spite  of  all  prohibitions  is 
very  strong.  Railroads  are  not  remarkable  for  resisting 
temptation  to  break  the  law  when  this  is  profitable  and 
safe.  It  might  be  possible  to  make  the  breaking  of  the 
law  more  dangerous  than  it  now  is.  It  might  be  possible 
first  to  give  the  Interstate  Commerce  Commission  more 
power  than  it  now  possesses  and  enable  it  to  require 
uniform  and  intelligible  accounting,  so  that  people 
could  find  out  what  railroads  really  do  charge;  and  it 
might  further  be  possible  by  some  use  of  crude  force  to 
compel  the  railroads,  in  spite  of  their  own  interest  in  every 
direction,  to  give  everybody  fair  treatment.  But  this  would 
require  a  long,  hard  and  discouraging  struggle,  and  it  so 
happens  that  this  is  not  the  only  thing  that  can  be  done. 
The  temptation  to  give  secret  rebates  is  entirely  due  to  the 
fact  that  there  are  rival  lines  which  are  not  now  pooled 
or  consolidated.  If  they  were  working  as  a  single  line 
and  dividing  profits,  it  would  not  make  any  difference 


44  THE  PEOBLEM  OF  MONOPOLY 

whether  the  great  shipper  sent  his  grain  or  steel  or  oil  by 
this  lino  or  by  that.  The  packers  of  Chicago,  who  have 
their  many  train  loads  of  freight  to  ship  every  day,  could 
not  get  any  special  favor  by  playing  off  one  railroad 
against  another  if  the  lines  were  all  united,  for  then, 
whichever  railroad  carried  the  freight,  the  profits  would 
be  divided  among  them  all. 

Pooling  removes  the  chief  temptation  to  make  secret 
rebates ;  and  where  there  is  no  great  temptation  to  disobey 
a  law,  even  a  "soul-less"  corporation  sometimes  obeys  it. 
The  temptation  makes  the  trouble.  As  there  are  very  few 
carrying  corporations  that  will  not  disobey  a  law  when 
they  can  do  it  safely  and  make  something  by  doing  it, 
there  are  very  few  that  will  disobey  it  when  it  is  at  all  dan- 
gerous and  they  can  make  nothing  by  it.  On  the  whole, 
it  is  comfortable  to  be  honest  even  in  the  capacity  of  a 
common  carrier,  and  if  we  let  railroads  unite  we  make  it 
easy  for  them  to  be  honest. 

But  if  we  do  this  do  we  not  jump  from  the  frying-pan 
into  the  fire  ?  Will  not  a  system  of  consolidated  railroads 
put  up  the  rates  of  freight  and  passenger  traffic  for  every- 
body? Would  not  this  create  a  very  paradise  for  the 
railroad  magnate?  He  would  only  have  to  treat  every- 
body alike  in  order  to  squeeze  them  all  ad  lihitum,  but  he 
would  treat  them  all  alike.  A  carrier  with  carte  hlanche 
to  make  charges  all  alike  high  could  get  very  rich.  He 
could  charge  double  or  quadruple  rates  to  everybody,  in 


GEEAT  CORPOEATIONS  AND  THE  LAW       45 

most  comfortable  security,  and  revel  in  more  than  Croesus- 
like  revenues. 

To  legalize  consolidations  is  to  create  at  once  the  neces- 
sity of  regulating  the  general  level  of  freight  charges. 
The  railroads  cannot  be  allowed  to  make  their  own  freight 
schedules  as  they  please  if  they  are  all  in  a  firm  combina- 
tion, and  the  state  which  permits  pooling  and  consolidat- 
ing will  have  to  draw  a  line  above  which  freight  charges 
shall  not  go.  And  now  I  am  coming  to  a  point  where  the 
railroad  managers  will  agree  with  me,  namely  the  diffi- 
culty of  making  a  satisfactory  tariff  of  charges  for  short 
hauls  and  long  hauls  and  for  every  kind  of  freight.  It  is 
a  complex  business  and  it  will  even  be  claimed  that  the 
state  cannot  make  a  workable  schedule.  Public  officials 
would  make  bungling  work  of  classifying  freight.  In  the 
first  place,  it  will  be  said,  they  do  not  know  how,  and  in 
the  second  place  they  would  encounter  plenty  of  inter- 
ested parties  willing  to  instruct  them  as  to  what  should  be 
charged  for  particular  kinds  of  freight.  If  they  had  at 
their  finger-tips  the  scientific  rules  for  making  an  ideal 
schedule  of  charges  there  would  be  an  overwhelming  pres- 
sure brought  to  bear  to  prevent  them  from  applying  those 
principles.  Every  big  producer  of  oil  or  coal  or  lumber 
or  flour  would  want  the  rates  on  those  articles  made  to 
favor  him ;  and  if  he  could  ever  manipulate  the  official 
charged  with  rate  making  as  the  managers  of  great  cor- 
porations know  how  to  manipulate  other  servants  of  the 


46  THE  PROBLEM  OF  MONOPOLY 

state,  it  Avoukl  come  to  a  point  at  Avliich  the  people's  agent 
wonld  not  want  to  apply  principles  scientific  or  legal  to 
the  making  of  the  schedule  of  rates.  "The  ox  knoweth 
his  owner  and  the  ass  his  master's  crib."  A  bought  offi- 
cial does  not  want  to  have  too  clear  a  preeeption  of  any 
kind  of  law. 

Is  the  case  hopeless?  Not  unless  all  government  is 
so;  for  through  and  through  the  fabric  of  our  state 
runs  the  same  perverting  influence— the  appeal  to  the 
official  to  betray  his  trust  in  the  interest  of  his  pocket. 
"We  must  find  a  way  to  have  the  king's  business— the 
business  of  our  collective  sovereign,  the  people— honestly 
done.  "We  must  have  at  some  time,  men  who  will  not 
betray  us,  in  offices  in  which  they  would  not  dare  to  betray 
us  and  are  not  under  great  pressure  to  betray  us.  We 
must  secure  high  character  in  the  personnel  of  the  gov- 
ernment and  must  place  it  under  heavy  bonds  to  do  right 
and  with  small  incentive  to  do  wrong.  Personal  charac- 
ter fortified  by  institutions— that  will  save  us  if  anything 
can ;  and  any  one  but  a  pessimist  will  believe  that  we  shall 
ultimately  have  it. 

A  glimpse  of  a  practicable  mode  of  getting  this  is  a 
great  strengthener  of  optimism;  and  on  this  point,  even 
though  it  be  in  an  inadequate  way,  we  should  spend  a  few 
words.  The  blunders  which,  as  it  is  said,  even  an  honest 
government  will  make,  will  be  trivial  evils  in  comparison 
with  evils  from  which  the  system  would  deliver  us.     The 


GEEAT  CORPOEATIONS  AND  THE  LAW       47 

discriminations  now  made  in  the  treatment  of  great  ship- 
pers and  small  ones,  which  threaten  to  fasten  on  the  peo- 
ple the  intolerable  burden  of  private  monopoly,  are  an 
evil  in  comparison  with  which  any  blunders  which  an 
honest  government  would  make,  shrink  into  insignificance. 
Blunders  can  be  corrected,  for  they  have  a  way  of  point- 
ing out  of  themselves  the  manner  of  correcting  them. 

Again,  it  will  not  be  necessary  to  make  de  novo  a  whole 
system  of  charges.  It  will  be  necessary  only  to  harmon- 
ize the  systems  that  are  now  in  force  and  to  prevent  them 
from  exacting  too  much  from  the  public;  and  he  would 
have  a  poor  opinion  of  his  countrymen  who  would  main- 
tain that  in  this  direction,  in  which  business  capacity,  the 
most  prominent  of  American  traits,  is  chiefly  needed,  a 
commission  competent  to  do  the  work  cannot  be  found. 

As  for  character,  that  has  been  secured  in  the  case  of 
Interstate  Commerce  Commissioners.  With  appointments 
based  on  a  sound  principle,  it  can  be  had  even  in  a  degen- 
erate republic;  and,  moreover,  the  temptation  to  pervert 
a  general  scale  of  charges  applicable  to  all  railroads  is 
not  a  tithe  as  strong  as  is  the  temptation  to  wink  at  unfair 
treatment  of  different  shippers  under  a  system  like  the 
present  one. 

If  it  be  true  that  we  must  stop  personal  discriminations, 
that  we  can  do  it  if  we  permit  consolidating,  and  if  that 
would  expose  us  to  the  danger  of  exorbitant  charges  ap- 
plied to  every  one  alike,  the  conclusion  is  unavoidable  that 


48  THE  PROBLEM  OF  MONOPOLY 

wo  must  lix  a  scale  of  maximum  charges ;  and  the  predic- 
tion is  safe  that  after  some  other  experiments  have  been 
tried  and  found  wanting,  we  shall  come  to  this  plan.  We 
shall  permit  and  even  favor  consolidations  for  the  economy 
and  the  efficiency  which  they  will  insure  and  for  the 
improvement  they  can  make  in  the  service  rendered  to 
the  public.  "We  shall  guard  against  generally  exorbitant 
charges  and  w^e  shall  put  so  far  behind  us  that  we  shall 
never  encounter  it  again  the  system  that  charges  the  great 
producer  a  little  and  the  small  producer  much  and  so 
fastens  on  the  public  the  evils  of  private  monopoly.  That 
our  common  carriers  should  consolidate  and  themselves 
constitute  a  monopoly  with  unrestrained  powers  would 
be  a  great  evil;  but  that  they  should,  without  formally 
uniting,  build  up  a  hundred  producers'  monopolies  is  a 
far  greater  one.  Of  the  two  evils,  if  we  must  have  one, 
it  would  be  better  to  choose  the  former;  but  it  is  still 
better  to  avoid  both,  and,  as  has  been  shown,  there  is  a 
practicable  way  to  do  it.  No  mere  difficulties  should  deter 
us  from  doing  it. 

Because  we  do  not  want  our  own  state  to  buy  the  rail- 
roads we  should  cause  it  to  regulate  them  in  a  way  that 
will  make  life  tolerable  for  those  independent  producers 
for  whom  it  is  often  intolerable  if  not  impossible.  When, 
however,  we  have  done  that  we  shall  have  a  still  harder 
thing  to  do,  for  we  must  manage  to  stop  cut-throat  com- 
petition by  the  trusts  themselves.    We  must  put  an  end 


GEEAT  COEPOEATIONS  AND  THE  LAW       49 

to  those  local  discriminations  in  the  selling  prices  of  goods 
which  are  a  chief  means  of  crushing  competition  and 
creating  monopoly.  We  must  stop  the  unfair  attacks  on 
local  producers  by  the  corporations  which  enjoy  a  general 
market.  If  there  is  an  independent  mill  in  the  far  west 
and  a  big  trust  somewhere  in  the  east,  you  must  not  allow 
the  trust  to  go  into  the  state  where  the  independent  mill 
is  operating  and  put  down  the  price  of  its  product  below 
cost  in  order  to  make  that  mill  shut  down,  and  keep  the 
price  up  everywhere  else.  Afterwards,  of  course,  the 
monopoly,  having  crushed  its  rival,  would  put  the  price 
up  in  the  very  state  in  which  the  mill  was  operating.  That 
is  the  playful  scheme  of  the  trust,  and  it  has  to  be  stopped. 
I  know  that  not  only  people  who  are  interested  in  trusts 
and  favor  them,  but  a  goodly  number  of  economists  agree, 
at  this  point,  in  saying  that  the  thing  cannot  be  done. 
*'You  may  possibly  succeed  in  your  railroad  law,  but  you 
can  not  succeed  in  this  trust  law.  You  cannot  prevent  the 
trusts  from  selling  cheaply  here  in  order  to  crush  a  com- 
petitor, while  selling  dearly  elsewhere  in  order  to  make 
money."  That  is  a  matter  of  opinion.  If  it  were  not 
possible  in  the  state  of  New  York  to  collect  a  price  for 
some  product  of  steel  in  excess  of  the  price  charged  in 
some  remote  part  of  the  country,— allowance  being  made 
for  freight  charges  always,— the  trust  would  never  dare 
to  beat  down  prices  very  low  in  that  remote  part  of  the 
country  for  the  sake  of  crushing  out  some  rival  who  might 


50  THE  PROBLEM  OF  MONOPOLY 

there  appear.  The  steel  trust  has  not  had  occasion  to  carry 
on  many  of  these  predatory  wars ;  and  for  that  reason  wo 
may,  without  singling  it  out  for  attack,  use  it  as  an  illus- 
tration of  what  a  great  trust  can  do  if  it  will.  It  could 
make  low  prices  for  steel,  say  in  Minnesota,  for  the  sake 
of  crushing  out  somebody  there,  and  keep  up  prices  every- 
where else.  But  if  federal  laws  or  laws  made  concurrent- 
ly in  the  several  states  made  it  unsafe  to  do  that,  the  local 
competitor  might  survive,  and  his  survival  would  afford 
guaranty  against  extortion.  The  mere  fact  of  selling  at 
a  cut-throat  rate  in  ^Minnesota  should  make  it  impossible 
to  collect  any  more  for  similar  products  sold  anywhere 
else.  A  regime  of  uniform  charges  would  go  far  toward 
disarming  monopolies. 

If  law  in  America  were  really  law,  and  not  the  expres- 
sion of  advice  or  a  pious  wish,  a  trust  would  not  often 
resort  to  the  dangerous  expedient  of  sacrificing  its  goods 
in  one  section  of  the  country  when,  by  so  doing,  it  ren- 
dered uncollectible  the  bills  for  larger  amounts  charged 
elsewhere  for  similar  goods.  We  must  put  life  enough 
into  our  statutes  to  make  them  law  to  this  extent.  With 
predatory  competition  ruled  out  the  trusts  will  give  us 
reasonable  prices,  but  with  this  practice  tolerated  they 
iwill  give  us  high  ones. 

In  the  way  of  fair  competition  the  trust  is  not  so 
dangerous  an  opponent  that  a  large  and  well-appointed 
mill  is  put  in  jeopardy  by  it.    The  trust  often  is  seriously 


GKEAT  COEPOEATIONS  AND  THE  LAW       51 

handicapped  by  the  possession  of  a  number  of  antiquated 
and  inefficient  mills,  and  when  a  new  competitor  comes 
into  the  field,  he  does  not  come  with  any  worn-out  machin- 
ery or  ill-located  buildings.  He  has  the  latest  and  best 
mill  that  he  can  have  built  placed  in  the  most  favorable 
situation  that  he  knows,  and  he  can  make  goods  about  as 
cheaply  as  the  trust  can  in  its  better  mills  and  more  cheap- 
ly than  it  can  in  the  poorer  ones.  Nevertheless  the  trust 
can  still  crush  him  if  it  is  allowed  to  come  into  his  terri- 
tory with  goods  offering  at  predatory  rates.  But  if  all 
over  its  vast  territory  it  must  also  sell  the  goods  at  a  sim- 
ilar sacrifice— if,  in  trying  to  crush  the  man  in  Minnesota 
the  trust  has  to  lose  money  in  every  state  in  the  union — 
the  rival  can  hold  out  as  long  as  it  can.  The  great  com- 
pany will  ruin  itself,  in  spite  of  its  vast  capital.  If  fair 
competition  is  allowed  to  survive,  the  trust  will  give  you 
lower  prices  than  you  can  have  without  it,  but  without 
competition  it  will  give  you  high  prices ;  and  the  difference 
between  a  sound  economy  and  an  unendurable  one.  To 
secure  the  sound  economy  we  shall  find  or  make  a  way  to 
overcome  difficulties. 

Although  the  difference  between  a  regime  of  uniform 
prices  and  a  regime  of  discriminating  prices  does  not,  on 
its  face,  look  world  wide,  it  really  is  so.  It  makes  the 
difference  between  freedom  and  oppression.  It  may  be 
thought  that  we  must  accept  the  oppression  because  the 
remedy  is  not  now  in  a  political  way  practicable.    You 


52  TIIK   PROBLEM  OF  MONOPOLY 

cannot  make  the  lojjislators  apply  it.  The  trust  has  too 
firm  a  hold  on  the  law-making  power.  That  so-called 
impossibility  is  not  what  should  ever  be  called  by  that 
name.  It  would  mean  that  the  people  cannot  do  a  thing 
because  their  representatives  ivill  not.  If  the  only  reason 
why  sound  trust  legislation  will  not  work  is  because  we 
cannot  get  it  at  all,  then  I  am  in  favor  of  doing  the  impos- 
sible. I  am  in  favor  of  forcing  those  legislators  to  do 
our  bidding ;  and  my  judgment  is  that  in  that  line  of  effort 
the  people,  when  they  know  what  they  want,  can  have  their 
waj'.  One  may  admit  a  lamentable  eclipse  of  democracy 
but  not  a  permanent  failure.  The  situation  suggests  the 
broad  question  how  we  may  bring  self-government  out  of 
its  eclipse  and,  in  particular,  it  suggests  those  democratic 
institutions,  the  initiative  and  the  referendum;  more  im- 
mediately it  suggests  a  revolt  against  political  machines, 
a  subject  into  which  the  present  brief  study  cannot  well 
lead  us.  We  have  only  to  assume  that  self-government 
will  in  some  way  survive,  and  the  regulation  of  trusts  will 
be  seen  to  lie  within  the  scope  of  practicable  law  making. 
The  political  machine  will  not,  in  that  case,  be  a  permanent 
asset  of  the  corporation,  and  you  cannot  forever  say  that 
the  trust  owns  the  boss,  the  boss  owns  the  legislator  and 
the  legislator   serves   its   owner's   owner,    enabling  him 

to  say,  "The  people  be disregarded." 

One  bulwark  of  the  trust's  power  might  conceivably 
be  removed.    A  trust  in  a  free-trade  country  has  very 


GEEAT  COEPOEATIONS  AND  THE  LAW       53 

little  power;  while  in  a  highly  protected  country  it  has  a 
great  deal.  There  are  numerous  trusts  in  free-trade  coun- 
tries, and  in  countries  with  a  much  lower  tariff  than  we 
have ;  but  they  have  not  become  monopolies.  In  England 
there  are  combinations ;  but  they  cannot  put  up  the  prices 
of  goods  to  a  higher  level  for,  if  they  did,  people  would 
buy  them  in  Germany  or  elsewhere.  If  there  were  a  high 
tariff  on  the  goods  they  could  put  the  price  up  with  safety 
as  far  as  foreign  competition  is  concerned.  If  duties  were 
heavy  prices  might  go  very  high  before  the  importing 
point  would  be  reached.  They  can  do  so  in  America  where 
the  importing  point  for  goods  is  very  high ;  and  we  there- 
fore cannot  rely  on  foreign  competition  to  protect  us. 
Quite  within  the  limit  which  is  set  by  the  cost  of  getting 
foreign  goods  and  paying  the  duty  on  them,  the  trusts  can 
make  a  great  monopoly  profit ;  and  so  it  comes  about  that 
in  the  west  and  to  some  extent  in  the  east,  there  is  a  very 
strong  plea  for  the  abolition  of  protective  duties  on  trust- 
made  goods.  We  have  bills  introduced  which  would  sweep 
away  all  the  duty  on  articles  which  American  makers  sell 
cheaply  in  foreign  countries,  in  competition  with  the  for- 
eign products,  and  sell  in  this  country  at  a  higher  price. 

We  have  to-day  an  elaborate  system  of  protection  which 
has  greatly  hastened  the  development  of  our  manufactur- 
ing. It  has  not  been  altogether  indefensible.  For  the 
original  creation  of  it  a  good  argument  can  be  made.  If 
there  were  a  debate  on  a  public  platform  as  to  whether 


54  THE  PROBLEM  OF  MONOPOLY 

the  system  of  protection  has  done  in  America  more  good 
than  evil,  the  affirmative  would  have  it  in  a  popular  ver- 
dict and  might  have  it  in  a  scientific  one.  The  people 
would  say,  "We  are  better  off  v^^ith  our  myriad  of  big 
mills  than  we  should  be  if  they  were  fewer  and  smaller." 
They  are  beginning  to  hesitate  when  the  question  takes 
the  shape  of  asking:  "Are  we  better  off  with  the  mills, 
the  trusts,  the  bosses  and  the  shrunken  popular  power?" 
If  all  this  is  chargeable  to  the  tariff  it  may  be  time  to 
reduce  it  or  sweep  it  away.  The  permanency  of  the  pro- 
tective system  may  not  be,  in  any  case,  a  desirable  thing ; 
and  the  long  continuance  of  it  may  come  to  hinge  on  the 
possibility  of  controlling  trusts  without  abolishing  it. 
Protection  tied  to  monopoly  may  have  a  hard  fight  for 
existence,  and  if  the  two  are  really  thus  united,  the  fight 
can  come  none  too  soon. 

"With  what  difficulty  shall  they  who  have  political 
entanglements  rise  to  the  level  of  patriotic  work  for  the 
people !  "With  what  difficulty  shall  a  body  of  men  making 
log-rolling  bargains  with  each  other  get  even  a  glimpse 
of  the  scientific  principles  on  which  the  reformation  of  a 
tariff  should  be  conducted !  What  should  be  done  is  one 
thing.  It  is  what  the  people  really  need  for  their  common 
welfare  and  progress.  What  can  be  done  by  the  agency 
of  Congress — especially  at  a  time  when  the  political  cal- 
dron is  in  the  midst  of  its  quadrennial  boiling— is  alto- 


GEEAT  COKPOKATIONS  AND  THE  LAW       55 

gether  another  question,  the  answer  to  which  is  far  more 
doubtful. 

Clear  as  daylight  is  the  policy  that  the  real  need  of  the 
country  requires.  It  is  not  a  sweeping  away  of  the  whole 
protective  system.  There  are  those  who,  if  they  could 
turn  history  backward,  put  themselves  at  the  beginning 
of  the  last  century  and  decide  over  again  the  question 
whether  we  should  have  a  protective  system  or  not.  would 
decide  not  to  have  one;  but  there  are  few  indeed  who, 
knowing  that  a  vast  network  of  industries  has  grown  up 
under  our  tariff  and  that  some  of  these  industries  are  still 
partially  dependent  on  it,  would,  if  they  had  the  power, 
sweep  away  every  vestige  of  duty. 

There  are  men  in  plenty  who  would  be  glad  to  see  the 
existing  duties  reduced  and  can  tell  how  they  wish  them 
modified.  They  are  not  in  favor  of  treating  as  an  ''infant 
industry"  a  business  that  has  grown  to  gigantic  size  and 
developed,  not  only  enormous  strength,  but  a  savage  dis- 
position. When  an  infant  of  that  type  makes  a  specialty  of 
attacking  and  crushing  his  American  competitor,  as  though 
the  latter  were  indeed  the  foreigner  whom  protection  is 
intended  to  exclude— when,  on  scenting  such  competition 
at  home,  he  says,  like  the  giant  of  the  nursery  tale,  "Fee, 
faw,  fum,  I  smell  the  blood  of  an  Englishman"— he  will 
make  the  American  people  somewhat  impatient  if,  in  the 
next  breath,  he  asks  them  to  pity  and  protect  his  helpless 
infancy. 


5G  THE  PROBLEM  OF  MONOPOLY 

When  wc  find  that  we  have  duties  which  are  not 
needed  to  protect  an  industry  as  such  but  are  effective  in 
sustaining  a  monopoly  in  the  industry  it  is  time  to  reduce 
them.  Sweeping  them  altogether  away  may  conceivably* 
crush  some  independent  producers  who  are  trying  to 
compete  with  the  trusts ;  but  reducing  them  to  a  legitimate 
level  would  not  do  that.  It  would  make  monopolistic 
prices  for  the  present  impossible,  and  if  the  measure  were 
followed  up  by  other  legislation,  it  would  make  them 
impossible  at  any  time. 

Let  us  concede  that  we  want  duties  that  are  high 
enough  to  secure  our  markets  for  American  producers; 
does  that  mean  for  American  monopolists  ?  Does  it  mean 
that  the  foreign  producer  shall  be  kept  out  of  our  market 
even  when  prices  here  are  raised  to  an  extortionate  level  1 
Was  our  protective  system  ever  intended  to  guarantee  to 
a  favored  body  of  producers  a  net  profit  of  twenty-five 
per  cent,  or  fifty  per  cent,  or  more  on  the  cost  of  their 
goods?  The  claim  has  always  been  that  competition 
among  producers  at  home  would  bring  prices  here  to  such 
a  level  that  they  would  cover  only  the  wages  of  labor  of 
all  kinds  and  an  average  return  for  capital. 

Now  there  is  always  a  certain  rate  of  duty  which  will 
bring  the  price  of  an  article  up  to  the  point  at  which  such 
fair  returns  can  be  realized.  In  the  case  of  many  an 
industry  they  could  be  realized  with  no  duty  whatever; 
but  in  the  case  of  those  which  are  still  unable  to  stand  the 


GEEAT  CORPORATIONS  AND  THE  LAW       57 

full  force  of  foreign  competition  a  duty  that  is  modest 
according  to  American  standards  would  suffice  to  secure 
our  own  manufacturers.  If  some  foreign  article  has  to 
pay  a  duty  of  fifteen  per  cent,  it  may  well  be  that  the 
American  maker  of  a  similar  article  can  sell  it  at  a  price 
that  will  make  his  business  profitable. 

What,  then,  is  the  effect  of  making  the  duty  fifty  per 
cent.  ?  It  is  to  make  it  possible  for  a  trust  to  add  another 
thirty-five  per  cent,  to  its  prices  before  it  begins  to  en- 
counter serious  interference  from  abroad.  If  it  can  deal 
with  its  American  rivals  by  the  effective  method  that  it 
has  learned  to  use  it  can  have  the  field  to  itself  and  pocket 
the  net  gain  of  about  thirty-five  per  cent.  That  measures 
the  tax  which  the  people  impose  on  themselves  for  the 
benefit,  not  of  the  industry  itself,  but  of  the  monopoly 
within  it. 

The  competition  anticipated  by  the  originators  of  the 
protective  system  would  cut  down  that  profit'  and 
cause  the  article  to  be  sold  at  some  approach  to  the  for- 
eign price.  If  we  can  rehabilitate  competition,  even  in 
the  potential  form,  something  like  this  result  will  be 
reached.  If  we  reduce  the  duty  to  fifteen  per  cent,  it  will 
be  reached ;  for  at  that  rate  any  mill  can  run  which  is  well 
equipped  and  willing  to  content  itself  with  a  fair  return. 
Our  manufactories  will  hold  their  own  against  foreigners, 
keep  their  home  market  and  make  as  much  money  as  any 
business  has,  in  the  long  run,  a  right  to  make. 


58  THE  PROBLEM  OF  MONOPOLY 

It  is,  of  course,  admitted  that  the  adjustment  of  duties 
on  that  principle  is  a  delicate  thing  and  requires  skill. 
Congress  is  not  noted  for  doing  things  delicately  or  for 
trying  to  do  them  altogether  in  the  way  that  is  best  for 
the  public.  Legislation  on  the  plan  of  "Vote-for-my-bill- 
and-I-will-vote-for-yours"  is  not  likely  to  give  the  most 
scientific  rate  of  duty.  The  actual  struggle  between  dif- 
ferent parties  as  to  how  high  duties  shall  be  is  usually 
among  men,  each  of  whom  wants  to  raise  some  duty  on 
the  schedule,  while  the  public  which  needs  to  have  the 
general  level  of  the  duties  lowered  is  a  spectator  with  less 
immediate  influence.  A  strong  commission,  backed  by  the 
public,  presenting  a  tariff  that  would  make  industries  safe 
and  monopolies  within  them  difficult  or  impossible  would 
not  be  thus  negligible. 

We  certainly  could  strip  away  the  unnecessary  part 
of  the  tariff,  which  is  simply  playing  into  the  hands  of 
monopoly,  and  we  could  keep  the  necessary  part  which  is 
protecting  the  honest  producer.  This  would  not  destroy 
consolidations  and  ought  not  to  do  so.  What  we  have  to 
fight  against  is  not  the  trust  as  a  big  agent  of  produc- 
tion, but  the  trust  as  a  big  monopoly.  So  long  as  it  is 
working  honestly  and  benefiting  the  people,  let  it  exist 
and  welcome.  If  sweeping  away  all  duties  would  crush 
it  and  its  rivals  together,  let  us  not  sweep  them  away,  but 
let  us  abolish  the  part  of  the  duty  which  makes  the  trust 


GREAT  COEPOEATIONS  AND  THE  LAW       59 

a  monopoly  by  shielding  it  from  foreign  competition  and 
enabling  it  to  crush  competition  at  home. 

We  have  encountered  here  the  paradox  that  under  a 
moderate  duty  an  independent  manufacturer  can  better 
sustain  the  competition  of  foreigners  and  his  own  country- 
men together  than,  under  an  exorbitant  duty,  he  can 
sustain  the  competition  of  his  countrymen  alone.  En- 
abled by  high  protection  to  make  great  profits  in  most 
of  its  field,  the  trust  can  well  afford  to  sell  goods  below 
cost  in  any  particular  corner  of  it  in  which  a  rival  may 
appear.  The  honest  manufacturer,  whom  for  our  own 
good  we  must  protect  and  foster,  is  crushed  under  a  high 
duty  as  he  would  not  be  under  a  low  one.  Naturally  he 
should  be  as  much  the  enemy  of  extravagant  protection 
as  of  free  trade. 

The  line  between  legitimate  duties  and  those  which 
create  monopolies  is  easily  drawn  in  theory,  and  it  can  be 
approximated  in  practice  with  little  real  difficulty.  It  is 
possible  to  ascertain  about  how  much  protection  is  justi- 
fiable and  how  much  is  utterly  unjustifiable.  It  may  not 
be  so  easy  to  induce  Congress  to  act  according  to  the 
result  of  such  an  investigation;  but  here  there  is  one 
recourse,  and  in  the  end  that  recourse  should  be  effective— 
an  appeal  to  the  people  who  are  the  party  interested,  who 
are  in  favor  of  honesty  and  are  taxed  by  monopoly,  and 
who  thrive  only  under  conditions  of  economic  freedom. 


CHAPTER  IV 
ORGANIZED  LABOR  AND  MONOPOLY 

It  goes  without  saying  that  in  industry  there  is  no 
interest  at  stake  that  compares  in  importance  with  the 
interest  of  labor.  This  is  true,  first,  because  laborers  are 
the  most  numerous  class  in  society  and,  by  the  mere  fact 
that  they  constitute  a  large  majority,  have  a  right  in  cases 
of  conflict  to  have  their  vital  interests  considered  some- 
what in  preference  to  those  of  other  classes.  In  the  sec- 
ond place,  laborers  feel  the  benefit  that  comes  from  get- 
ting more  pay  and  the  injury  that  comes  from  getting  less 
more  than  other  classes  feel  the  effects  of  changes  of 
income.  No  addition  to  the  income  of  a  man  who  is  worth 
from  one  million  to  one  hundred  million  dollars  will  make 
a  material  difference  in  his  well  being ;  but  an  addition  of 
twenty-five  cents  a  day  to  the  wages  of  a  man  who  now 
gets  two  dollars  a  day  will  make  a  difference  that  he  will 
appreciate.  And  if  there  are  a  great  many  millions  of 
people  substantially  in  the  position  that  the  latter  is  in,  the 
whole  question  of  wages  takes  on  an  importance  which  far 
exceeds  that  of  any  other  economic  question. 

There  is  very  little  disposition  to  question  the  right  of 

workmen  to  do  what  they  can  to  raise  wages,  provided 

60 


OEGANIZED  LABOR  AND  MONOPOLY  61 

that  they  keep  within  the  limits  of  what  is  lawful.  I  do 
not  need  even  to  recall  the  time  when  combinations  to 
raise  wages  were  Tinder  the  ban  of  the  law.  That,  in 
these  days,  is  ancient  history,  and  one  seldom  encounters 
persons  who  venture  to  deny  the  right  of  workmen  to 
combine  for  the  purpose  of  making  better  terms  with  their 
employers  than  they  could  otherwise  make.  One  does  not 
often  encounter  anybody  who  is  disposed  to  deny  the  fact 
that  by  combination  they  can,  in  some  degree,  attain  their 
object  and  actually  make  somewhat  better  terms.  Now 
and  then  a  man  claims  that  organization  does  not  benefit 
workmen;  that  after  all  the  strikes  and  lockouts  and  the 
turmoil  that  take  place,  the  rate  of  pay  settles,  in  the  end, 
at  just  about  the  level  at  which  it  would  settle  if  there 
were  no  organizations  at  all.  Persons  who  make  that 
claim  are  scarce,  and  by  far  the  greater  number  confess"! 
that  collective  bargaining  is  advantageous  for  the  work- 
man, for  the  reason  that  it  prevents  large  bodies  of  work- 1 
ing  people  from  competing  with  each  other  for  employ- j 
ment  and  reducing  each  other's  pay.  If  there  were  only 
one  employer  in  a  locality  to  whom  workmen  could  at  all 
conveniently  resort  for  employment,  and  if  there  were  five 
thousand  workmen  in  that  locality,  there  is  quite  a  chance 
that  some  of  these  men,  finding  themselves  out  of  work, 
would  eagerly  compete  for  places  against  those  who  have 
them,  and  that  this  would  bring  the  pay  of  all  to  a  lower 
level  than  would  exist  under  more  equal  conditions.    If, 


62  THE  TKOBLEM  OF  MONOPOLY 

however,  the  five  thousand  men  Avere  in  a  union  and  were 
dealing  as  a  union  with  their  employer— if  there  were,  in 
that  place,  one  employer  and  one  collective  employee — 
that  element  of  inequality  between  the  parties  to  the  wages 
contract  would  be  largely  removed  and  the  bargain  would 
proceed  on  fairly  equal  terms.  The  employer  might  in- 
deed say:  *'I  won't  pay  what  you  ask  and  I  will  take  my 
chance  of  filling  your  places;"  but  if  there  were  few  men 
available  with  whom  to  fill  the  places— if  new  men  could 
not  be  secured  except  under  difficulties  and  in  small  num- 
bers— the  employer  would  yield  something  rather  than 
provoke  a  bitter  contest  with  his  employees. 

This  disposition  to  yield  in  advance  of  a  strike  is  worth 
more  to  the  men  than  an  actual  stoppage  of  work.  The 
strike  which  is  held  in  reserve,  to  be  resorted  to  only  in 
case  of  need,  is  the  chief  reliance  of  organized  labor,  and 
a  part  of  the  pay  that  the  men  get  when  they  never  strike 
at  all  is  due  to  their  ultimate  power  to  do  this.  It  is  a 
great  mistake  to  measure  the  value  of  organization  by 
what  workmen  get  through  actual  fights  with  employers. 

Now  the  power  and  the  whole  position  of  labor  organ- 
izations have  been  radically  changed  by  the  advent  of 
monopolies  on  the  side  of  capital,  and  that,  too,  in  ways 
that  very  few  people  appreciate.  It  is  not  realized  that 
a  body  of  workmen,  although  they  have  lost  one  power 
which  they  formerly  possessed,  have  gained  another 
power  and  taken  a  new  relation  toward  both  employers 


OEGANIZED  LABOR  AND  MONOPOLY  63 

and  the  public.  Owing  to  this  change  in  the  powers  of 
the  union,  the  whole  attitude  of  the  public  towards  labor 
organizations  has  been  changed  and  may  easily  become 
less  sympathetic. 

Let  us  look  at  the  simple  facts  in  the  case :  Suppose 
there  are  one  hundred  employers  competing  with  one 
another,  as  in  many  a  department  of  business  there  for- 
merly were,  and  a  strike  takes  place  which  affects  only  a 
few  of  them.  Possibly  it  affects  a  dozen  or  twenty,  who 
occupy  some  one  section  of  the  country.  In  that  case,  if 
the  strike  is  properly  timed,  and  if  the  strikers  are  moder- 
ate in  their  demands,  they  are  morally  certain  to  win. 
The  employers  are  unwilling  to  have  production  stopped. 
We  are  speaking  of  a  normal  market  arid  not  of  a  falling 
one  in  which  stopping  the  mills  may  not  do  harm ;  and  we 
can  see  that  under  normal  conditions  it  is  disastrous  to  be 
obliged  to  close  them.  The  customers  who  have  patron- 
ized those  mills  must  not  be  allowed  to  drift  away  to 
others.  A  producer  knows  that  his  competitors  are  always 
ready  to  step  in  and  supply  his  customers  when  he  fails  to 
supply  them,  and  that  he  loses  what  he  would  call  the  good 
will  of  his  business  by  allowing  this  to  happen.  It  is  not  as 
easy  to  win  back  customers  as  it  is  to  keep  them  when  one 
once  has  them;  and  therefore  it  is  disastrous  for  a  few 
men,  out  of  a  large  number,  to  stop  production.  They  are 
so  unwilling  to  do  it  that  they  prefer  to  make  terms  with 
their  employees  if  they  can. 


64  THE  TEOBLEM  OF  MONOPOLY 

On  the  other  hand,  where  there  are  many  independent 
mills  and  where  competition  is  active  there  is  a  sharp  limit 
on  what  the  owners  can  grant  in  the  way  of  concessions. 
The  margin  of  profit  on  their  goods  may  be  close.  It 
often  happens  that  a  corporation  which  makes  a  great 
many  thousands  of  dollars  in  the  course  of  the  year  does 
not  make  a  large  percentage  of  profit  on  each  article  that 
it  sells.  The  large  profits  come  from  the  great  volume  of 
the  business.  The  prices  are  fixed  by  competition  among 
all  the  different  producers  and  if  a  few— say  twenty  out 
of  a  hundred— agree  to  concede  rates  of  pay  which  the 
remainder  do  not  concede,  there  is  a  chance  that  those 
who  make  the  concession  may  not  be  able  to  run  very 
long.  Any  large  difference  between  the  wages  they  pay 
and  those  which  their  rivals  pay  may  sweep  away  the 
margin  of  profit  on  their  products.  There  is  a  small  zone 
within  which  the  wages  of  labor  may  be  made  to  fluctuate 
upward  and  downward  by  virtue  of  the  power  of  organi- 
zation and  the  reserve  power  of  strikes,  but  you  cannot 
make  employers,  under  these  conditions,  advance  wages 
very  much.  As  a  rule,  the  only  time  when  you  can  make 
them  advance  wages  at  all  is  the  time  when  prices  are 
rising  and  they  are  making  unusual  margins  of  profit. 
Then  there  may  be  some  prospect  that  all  employers  in 
that  particular  line  of  business  may  be  made  to  give  the 
advance  which  the  workers  claim.  If  you  can  bring  them 
all  into  line  so  that  no  one  has  any  great  advantage  over 


OEGANIZED  LABOE  AND  MONOPOLY  65 

another,  you  can  make  them  concede  a  certain  advance 
corresponding  in  a  measure  to  the  rise  in  prices.  Strikes 
on  a  rising  market  are  apt  to  succeed  if  they  are  for 
enforcing  moderate  demands;  but  strikes  against  a  fall- 
ing market  almost  invariably  fail. 

Now  all  this  is  changed  by  the  organization  of  corpora- 
tions on  an  enormous  scale.  On  the  supposition  that  a 
trust  were  a  complete  monopoly,  and  that  it  really  con- 
trolled the  entire  output  of  goods  in  its  line,  it  would  be 
able  to  make  much  larger  concessions  to  labor  than  com- 
peting employers  can  ever  make.  It  would  have  the  power, 
when  prices  have  not  risen  sufficiently  of  themselves,  to 
make  them  rise.  At  the  cost  of  somewhat  curtailing  the 
sale  of  the  goods  the  trust  can  make  purchasers  pay  more 
for  them ;  and  within  limits  it  is  profitable  to  do  this.  It 
would  be  very  hard  for  a  body  of  workmen,  however  well 
organized,  to  compel  a  few  competing  employers  to  give  an 
advance  in  wages  that  would  sweep  away  ten  per  cent,  of 
the  selling  price  of  their  products;  but  it  is  not  hard  for 
the  trusts  to  put  up  prices  as  much  as  that  and  so  concede 
what  workmen  may  demand  without  cutting  down  their 
own  original  profits.  We  have  often  seen  them  put  up 
prices  more  than  that ;  and  if,  when  they  do  this,  the  union 
has  power  enough  to  bring  a  strong  pressure  to  bear  upon 
them,  the  chances  are  quite  considerable  that  it  will  secure 
a  liberal  advance.     The  trust  may  charge  over  to  the 

purchasing  public  whatever  it  concedes  to  its  men  and 
6 


5G  THE  TKOBLEM  OF  MONOPOLY 

maj'  even  get  a  further  profit  in  the  bargain.  We  are 
paying  high  enough  prices  for  coal  this  winter  to  indem- 
nify the  coal  operators  in  a  very  liberal  way  for  all  the 
additional  pay  they  are  giving  to  their  men.  Miners  have 
secured  a  concession ;  the  operators  have  put  up  the  price ; 
the  public  is  paying  the  bills  with  an  overplus. 

Now  a  trust  has  this  power  of  making  larger  conces- 
sions that  competing  employers  can,  because  it  can 
make  the  public  pay  the  bills.  Do  the  trusts,  however, 
have  the  disposition  to  do  it?  Can  the  employees  use 
pressure  enough  to  make  them  do  it?  From  no  purely 
economic  reason  will  the  trusts  do  this  of  their  own 
motion ;  and  trade  unions  have  a  smaller  power  over  them 
than  over  competing  employers.  This  is  not  wholly  be- 
cause the  combination  is  large,  although  that  has  some- 
thing to  do  with  it;  it  is  because  the  workmen  cannot  hurt 
the  combination  nearly  as  much  by  stopping  its  work  as 
they  can  hurt  a  competing  employer.  The  miners  recent- 
ly stopped  operations  in  the  coal  regions  and  incidentally 
reduced  the  business  of  the  coal  railroads ;  but  they  gave 
the  operators  an  excellent  opportunity  to  work  off  inferior 
coal  at  satisfactory  prices  and  the  further  opportunity  to 
raise  the  permanent  price  of  coal  in  a  way  that  cannot  fail 
to  be  consoling  to  themselves.  A  great  combination  is  not 
as  reluctant  to  stop  operations  as  the  competing  employer 
because  it  gets,  in  the  end,  such  an  indemnity.  When  one 
competing  employer  stops  work  his  stopping  does  not 


OEGANIZED  LABOR  AND  MONOPOLY  67 

greatly  change  prices,  and  therefore  he  gets  no  indemnity. 
He  sees  his  business  drifting  away  from  him,  as  his  com- 
petitors increase  the  product  of  their  mills  and  supply  his 
customers.  Consumers  find  in  the  shops  as  much  mer- 
chandise as  they  found  before  and  the  prices  remain  about 
the  same. 

In  the  case  of  a  monopoly  the  strike  may  throw  a  little 
useful  dust  in  the  eyes  of  the  public,  as  to  the  cause  of  the 
new  tax  which,  in  the  shape  of  an  advanced  price,  it  has 
to  pay.  It  seems  to  be  the  strike  only  that  is  to  blame  for 
this.  If  miners  begin  a  fight  and,  in  the  end,  the  price  of 
coal  goes  up,  we  charge  the  advance  to  the  miners,  though 
we  blame  them  far  less  than  we  should  blame  the  opera- 
tors if  they  began  the  fight  in  order  to  put  up  the  price ; 
for  in  this  latter  case  we  know  that  they  began  it  for  the 
sake  of  getting  the  higher  price.  They  are  debarred  from 
claiming  that  the  stoppage  of  work  was  forced  on  them, 
that  they  are  doing  all  they  can  to  run  the  mines,  etc. 
This  may  be  said  in  the  case  of  a  strike,  and  even  in  cases 
in  which  the  stoppage  of  work  is  welcomed  by  the  em- 
ployers if  not  adroitly  brought  about  by  them,  there  is  a 
chance  that  the  people  who  are  characterized  as  "the 
marines"  may  believe  it.  Now  how  are  the  people 
affected  by  the  new  conditions?  The  public  pays  much 
larger  bills  for  strikes,  lockouts  and  discontinuance  of 
production,  than  they  had  to  pay  under  the  competitive 
system.    The  strike  now  is  likely  to  stop  almost  complete- 


gg  THE  PROBLEM  OF  MONOPOLY 

ly  the  production  of  some  article  and  if  it  is  a  staple  article 
the  stoppage  throws  the  industrial  system  into  confusion. 
A  strike  that  paralyzes  the  production  of  fuel  or  raw 
materials  or  puts  a  stop  on  transportation  is  too  serious 
an  evil  to  be  tolerated.  Where  only  a  few  mills  or  mines 
are  affected  there  may  be  a  shadow  of  justification  for 
the  claim  that  employers  often  put  forth,  that  this  is 
"their  business"  and  not  the  public's  and  that  the  public 
must  keep  their  hands  off.  They  have  scarcely  the  right 
to  ''run  their  own  business  as  they  please"  without  any 
limitation,  even  where  the  public  is  not  dependent  on  it; 
for  even  there  employees  have  their  equities  which  are 
worthy  of  consideration ;  but  where  the  public  is  depend- 
ent on  the  business  so  that  the  interruption  of  it  is  a  disas- 
ter every  faint  shadow  of  justification  for  such  a  claim 
vanishes.  A  monopoly  that  controls  the  supply  of  fuel 
performs  a  public  function  and  the  people  have  something 
to  say  about  every  discontinuance  of  it.  The  claim  that 
there  are  three  parties  involved  in  a  dispute  that  causes 
such  a  stoppage,  namely  the  strikers,  the  employers  and 
the  public,  is  exceedingly  well  taken. 

That  does  not  really  exhaust  the  number  of  parties 
that  are  concerned  in  labor  questions  under  modern  con- 
ditions ;  for  their  effects  on  workmen  are  to  be  considered 
in  another  way.  As  a  part  of  the  public,  workers  do  not 
wish  to  go  without  fires  in  the  winter  season,  and  therein 
their  interests  are  the  same  as  th(\se  of  a  large  number  of 


OEGANIZED  LABOR  AND  MONOPOLY  C9 

persons  not  in  the  ranks  of  labor ;  but  they  are  interested 
in  the  matter  of  -wages  directly.  Even  peaceful  curtail- 
ments of  production  in  one  department  of  business 
have  a  detrimental  effect  on  the  wages  of  labor  in  other 
departments.  Limiting  the  employment  of  labor  at  one 
point  creates  an  over-supply  at  other  points.  Without  fully 
tracing  such  effects  of  limiting  production  we  have  gone 
far  enough  clearly  to  see  that  a  strike  against  a  great  mo- 
nopoly which  controls  a  large  part  of  the  supply  of  some 
article,  is  a  far  more  serious  matter  than  a  strike  against  a 
few  competing  employers.  In  the  former  case  the  workers 
have  not  the  lever  which  they  would  have  in  the  latter  to 
force  their  employers  to  make  concessions.  On  the  other 
hand  the  employers  have  not  the  same  reason  for  resisting 
the  pressure.  The  workers  cannot  coerce  the  monopo- 
listic corporations,  as  they  could  independent  employers, 
but  the  great  monopoly  has  not  the  same  inducement  to 
resist  pressure  from  the  workmen  as  the  independent 
employer  has ;  and  so  it  has,  on  the  whole,  happened  that, 
up  to  the  present  time,  workers  have  done  a  little  better 
in  dealing  with  the  monopolies  than  they  have  in  dealing 
with  competing  employers.  The  power  of  the  monopolies 
to  make  a  large  concession  has  counted  for  more  than  the 
lack  of  power  on  the  part  of  the  union  to  force  them  to 
make  it.  The  weaker  pressure  encountering  a  weaker 
resistance  has  done  the  business  and  workers  have  fared 
just  a  little  better  in  the  employment  of  the  large  monopo- 


70  THE  PROBLEM  OF  MONOPOLY 

lies  than  tlioy  have  done  in  small  establishments.  But 
what  will  happen  if  the  resistance  becomes  strong?  A 
secure  monopoly  on  the  side  of  capital  can  resist  the  work- 
men, if  it  will,  and  that  too  with  a  fourfold  power;  and 
it  may  easily  have  inducement  enough  to  do  so  to  put  an 
end  to  easy  yielding. 

There  is  one  attendant  fact  which  has  come  to  signify 
a  great  deal  more  than  it  formerly  did,  which  it  is  neces- 
sary in  this  connection  to  take  into  account.  An  exten- 
sion of  the  scale  of  the  laborers'  organization  may  give 
them  more  power  to  coerce  employers,  and  this  equaliza- 
tion of  the  belligerent  forces  on  the  two  sides  may  bring 
about  a  truce.     Equal  opponents  prefer  peace  to  fighting. 

Even  when  working  under  great  corporations  em- 
ployees may  seem  to  have  power  to  bring  a  large  pressure 
to  bear  upon  them  and  force  them  to  pay  more  than  they 
otherwise  would— more  than  any  employer  would  have 
paid  under  the  old  conditions.  If  the  organization  of  the 
men  includes  a  great  majority  of  all  who  work  in  the 
trade  within  the  limits  of  the  country  or  within  easy 
reach  of  the  country,  then  it  is  impossible  even  for  the 
great  corporation  to  fill  all  their  places. 

As  a  matter  of  fact  the  workmen  have  never  been  thus 
completely  organized.  A  few  trade  unions  include  a  very 
large  number  of  those  who  practise  their  craft,  but  a  ma- 
jority of  them  control  only  a  limited  portion  of  this  body. 
A  majority  of  persons  in  handicrafts  are  not  in  organiza- 


OEGANIZED  LABOE  AND  MONOPOLY  71 

tions,  if  you  take  the  country  as  a  whole  into  account. 
If,  therefore,  the  union  men  go  on  a  strike,  and  there  are 
to  be  had  in  the  country  plenty  of  persons  competent  to 
fill  their  places,  and  if  in  striking  they  demand  materially 
more  than  these  non-unionists  are  getting,  the  employing 
company  finds  no  natural  difficulty  in  the  way  of  filling 
the  vacated  places.  It  may  take  a  little  while  to  do  this, 
because  some  traveling  and  searching  is  involved ;  but  it 
can  be  done  in  the  end,  and  a  body  of  workmen  who  vacate 
their  places  and  refuse  to  go  back  to  them  unless  they  get 
a  rate  of  pay  which  is  considerably  higher  than  other 
available  workmen  are  willing  to  take,  would  have  to  sit 
idly  by,  as  the  places  were  one  after  another  filled.  Pos- 
sibly, when  the  defeat  of  their  effort  seemed  sure,  they 
might  call  off  the  strike  and  rush  to  get  back  as  many  of 
the  places  as  possible.  A  strike  for  rates  of  pay  that 
are  higher  than  competent  men,  in  large  numbers,  can 
easily  be  had  for  would  naturally  have  little  chance  of 
success.  And  this  raises  in  the  men's  minds  the  question 
how  it  is  possible  to  make  it  difficult  to  fill  those  places. 
It  can  be  made  somewhat  so  by  a  contract  labor  law  which 
prevents  the  importing  of  men  from  foreign  countries. 
Many  years  ago  a  strike  was  ordered  in  certain  shoe  fac- 
tories by  the  old  organization  known  as  the  Knights  of 
St.  Crispin  and  the  owners  of  these  mills  ran  them  with  a 
new  force  consisting  of  Chinamen.  There  are  several 
reasons  why  that  could  not  now  happen.    First,  we  do 


72  THE  PROBLEM  OF  MONOPOLY 

not  let  Chinamen  come  in ;  and  secondly,  we  have  a  con- 
tract labor  law,  which  would  prevent  people  from  other 
countries  coming  in  under  contract  to  fill  a  large  number 
of  places  at  once.  These,  however,  are  not  the  only  rea- 
sons. Most  persons  will  admit  that  if  a  body  of  Chinamen 
came  in  to  take  the  places  of  strikers,  these  Chinamen 
would  not  be  a  quite  safe  risk  for  life  or  accident  insur- 
ance. An  economic  argument  will  appeal  to  the  striking 
workmen  and  cause  them  to  do  that  which  law  and  the 
officers  of  the  law  will  be  either  unable  or  unwilling  to 
prevent.  Policemen  and  militiamen  disperse  mobs;  but 
the  ''slugging"  of  a  man  here  and  another  there  is  not 
prevented. 

Some  of  this  is  done  without  the  most  effective  con- 
demnation on  the  part  of  the  local  community.  It  is  not 
fair  to  say  that  extreme  violence  is  ever  condoned  by  the 
public;  for  that  is  not  true.  No  local  community,  even 
when  it  sympathizes  with  strikers,  would  willingly  allow 
a  reign  of  terror  to  be  established.  It  does  permit  strik- 
ers to  use  a  kind  of  "persuasion"  which  has  some  stronger 
arguments  than  any  verbal  ones  behind  it.  Such  argu- 
ments do  not  stop  short  of  endangering  life  and  limb,  and 
therefore  they  amount  to  crime ;  but  some  of  this  is  toler- 
ated. As  a  general  rule,  enough  of  this  treatment  to  keep 
free  workmen  from  taking  positions  vacated  by  strikers 
would  find,  not  a  complete  approval  by  the  community, 
but  a  certain  apologetic  treatment.     We  are  here  speak- 


OEGANIZED  LABOE  AND  MONOPOLY  73 

ing  of  the  local  community  in  which  a  strike  takes  place 
and  not  of  the  general  body  of  the  people  of  the  country ; 
for  it  cannot  be  said  that  the  general  body  of  people  in 
the  country  would  look  with  toleration  on  even  a  mild 
type  of  violence,  and  it  would  certainly  not  look  with 
toleration  upon  an  amount  of  it  that  would  endanger  life, 
limb  or  property.  There  is  often  a  different  feeling  in  a 
local  community  which  causes  it  to  condone  a  certain 
amount  of  positive  violence.  It  finds  in  the  case  "exten- 
uating circumstances,"  and  if  the  criminal  acts  do  not  go 
too  far,  is  not  disposed  to  interfere  with  them. 

Now  what  is  the  basis  of  this  feeling?  Why  does  not 
every  right-minded  person  condemn  all  violence  directly 
and  without  qualification  ?  It  is  the  feeling  that  the  strik- 
ers in  the  case  may  be  claiming  as  wages  no  more  than  is 
equitable — no  more  than  a  fair  court  of  arbitration  would 
give  them — and  that  if  employers  are  allowed  to  import 
new  men  without  interference  they  may  establish  rates  of 
pay  which  do  injustice  to  workers.  The  sharp  arguments 
used  to  prevent  the  new  men  from  coming  present  them- 
selves to  the  mind  of  the  local  community  as  a  regrettable 
means  of  preventing  an  injustice.  On  the  basis  of  their 
productive  power  the  striking  workmen  are  entitled  to  a 
certain  rate  of  pay.  If  new  men  are  allowed  to  come  in 
without  let  or  hindrance,  no  one  will  get  this  rate.  Such 
is  the  tacit  plea  for  slugging. 

Very  important  in  morals  as  in  business  is  the  question 


74  THE  PEOBLEM  OF  MONOPOLY 

how  much  right  a  man  has  to  his  position  after  he  has 
vacated  it.  There  is  a  so-called  eleventh  commandment, 
*'Thou  shalt  not  take  thy  neighbor's  job;"  but  you  can 
apply  this  rule  only  so  long  as  the  neighbor's  title  is 
good;  and  there  are  circumstances  in  which  this  right  to 
the  position  is  forfeited.  Up  to  the  time  when  the  laborer 
forfeits  his  right  to  the  place  the  community  wants  to  see 
his  tenure  recognized.  The  community  does  not  want  to 
see  a  body  of  men  who  have  held  positions  for  a  long  time 
and  done  well  in  them  thrust  to  one  side  and  other  people 
put  in  their  places,  so  long  as,  in  striking  for  higher  pay 
or  shorter  hours  of  labor,  the  original  body  claims  no 
more  than  is  just.  If,  however,  the  claims  are  more 
than  is  just — if  the  men  persist  in  saying,  "We  will  not 
work  on  the  present  terms,  or  on  any  terms  except  those 
of  our  own  making;  we  will  prevent  anybody  else  from 
working  even  on  just  terms,  and  we  will  do  it  ourselves  in 
our  own  violent  way, ' '  there  is  no  community  in  the  world 
which  would  ever  justify  that  position.  The  public  any- 
where would  uphold  the  law  and  the  officers  of  the  law 
in  making  it  impossible  to  interfere  with  men  who  accepted 
just  terms  and  displaced  men  who  refused  them. 

It  all  hinges  on  the  question  whether  the  demands  of 
strikers  are  or  are  not  just.  Now,  in  what  way  are  we 
to  know  whether  they  are  so  or  not  ?  Neither  of  the  con- 
tending parties  is  impartial  enough  to  tell  us  or  to  ascer- 
tain for  himself;  and  the  first  thing  that  is  needed  is  a 


OEGANIZED  LABOK  AND  MONOPOLY  75 

disinterested  judgment.  Since  the  claim  of  workmen  to 
own  their  places  even  when  they  are  not  working  in  them 
depends  entirely  on  the  justice  of  the  demands  which  they 
make  on  their  employers,  it  is  clearly  necessary  to  have 
some  means  of  knowing  whether  these  demands  are  or 
are  not  just.  The  logic  of  the  whole  situation  involves 
some  system  of  arbitration  in  the  future,  and  not  very  far 
in  the  future,  if  the  great  interests  at  stake  are  to  be  well 
protected.  Before  we  discuss  that  we  should  notice  one 
practical  fact.  The  incentive  to  rely  on  slugging  as  a 
means  of  keeping  possession  of  places  when  a  strike  is  in 
progress  lies  mainly  in  the  fact  that  the  organization  of 
the  laborers  is  imperfect.  Union  workers  are  in  a  minor- 
ity and  men  who  are  willing  to  work  for  less  than  union- 
ists demand  are  abundant.  The  organized  laborers  must 
let  these  men  have  the  places  or  find  forcible  means  of 
keeping  them  off.  This  motive  for  attacking  the  inde- 
pendent workmen  would  be  reduced  if  the  organization 
of  trades  were  complete.  If  everyone  working  at  a  trade 
were  in  a  union  and  if  all  the  local  unions  of  each  trade 
were  combined  in  a  national  or  international  one,  workers 
could  abandon  their  places  with  an  approach  to  impunity, 
knowing  that  if  employers  put  other  laborers  into  the 
places,  it  would  be  raw  workers  or  apprentices,  who  would 
have  to  learn  a  new  trade  before  they  would  be  worth 
much.  That,  of  course,  depends  on  what  the  character  of 
the  occupation  is,  and  if  it  were  something  like  driving  a 


76  THE  PROBLEM  OF  MONOPOLY 

delivery  wagon  or  even  manipulating  a  trolley  car,  the 
trade  could  be  learned  with  some  rapidity;  but  if  any 
considerable  amount  of  acquired  skill  were  needed  in  the 
trade,  complete  organization  would  give  a  body  of  efficient 
men  a  fair  control  of  it  and  it  would  be  almost  impossible, 
if  not  quite  impossible,  to  fill  their  places  if  they  went  on 
a  strike. 

Most  persons  have  noticed  that  the  price  of  window 
glass  is  now  high.  There  is  a  strong  organization  of  glass 
blowers,  who  get  very  high  wages.  They  are  few  rela- 
tively to  the  number  that  might  be  employed ;  there  is  no 
good  source  from  which  a  new  supply  can  be  had.  The 
fee  for  admission  to  the  union  is  extravagantly  high  and, 
in  the  case  of  most  men,  prohibitory.  The  union  is  able 
to  pursue  with  success  a  policy  of  exclusion.  Though  it 
does  not  absolutely  include  all  of  the  glass  blowers  in  the 
country,  it  has  a  practical  control  over  all  and  a  strike  of 
the  glass-blowers'  union  would  have  an  exceptional  power 
to  coerce  employers,  who  cannot  fill  the  places  which  are 
vacated.  In  such  a  case  it  would  not  be  necessary  to 
resort  to  violence.  It  would  not  be  possible  to  secure 
enough  non-union  men  to  run  the  furnaces.  Indeed,  it  is 
said  that  there  are  not  enough  skilled  men  in  the  country 
to  run  nearly  all  the  furnaces  now,  even  when  the  entire 
force  of  the  union  is  employed.  Now  why  should  a  union 
that  is  in  such  a  position  ever  resort  to  violence?  Few 
unions  will  do  so  if  they  shall  attain  the  completeness  of 


ORGANIZED  LABOE  AND  MONOPOLY  77 

organization  which  has  been  attained  by  the  glass  blowers. 
We  shall  then  hear  less  of  the  disorders  which  attend 
strikes;  but  we  may  hear  more  of  another  phase  of  the 
labor  problem. 

The  situation  in  which  every  trade  union  is  a  monopoly 
is  eminently  desirable  from  the  point  of  view  of  mere 
social  tranquillity— unless  a  general  and  thorough  revolu- 
tion is  threatened.  Too  much  monopolistic  power  on  the 
side  of  trade  unions  might  create  that  danger,  though  it 
would  stop  most  of  the  ordinary  slugging.  What  any 
monopoly  signifies  is  a  tax  on  the  public,  and  close  cor- 
porations of  skilled  workers  could  tax  the  purchasers  of 
goods  and  force  down  the  pay  of  independent  labor  at  the 
same  time.  Glass  blowers  make  us  pay  abnormally  for 
windows,  but  that  tax  does  not,  by  itself  alone,  rest  very 
heavily  on  people  who  live  in  rented  houses.  A  few  dimes 
in  a  year  will  pay  all  that  most  families  are  forced  to  con- 
tribute through  the  action  of  the  window  glass  makers. 
A  small  tax  scattered  over  the  whole  country  may  yield 
in  the  aggregate  a  very  large  sum ;  and  if  such  taxes  were 
multiplied — if  there  were  not  one  union  but  fifty  or  a 
hundred  that  were  able  to  make  such  exactions— the  tax 
on  every  consumer  would  become  very  much  greater,  and 
would  be  almost  intolerable  for  people  of  small  means. 
If  many  labor  organizations  were  really  monopolies  them- 
selves and  were  pursuing  the  policy  of  keeping  down  the 
supply  of  labor  in  their  several  fields,  they  would  tax  each 


78  THE   PROBLEM   OF   MONOPOLY 

other  to  some  extent,  but  the  whole  body  of  them  would 
tax  the  public  more  severely.  Workers  in  one  union 
would  pay  a  tribute  to  other  unions,  but  there  would  be 
a  general  gain  for  the  entire  body  in  so  far  as  a  further 
tax  rested  on  other  people.  A  considerable  part  of  this 
tax  would  rest  on  persons  who  are  not  workmen  at  all, 
but  what  most  interests  us  is  the  condition  of  laboring 
men  outside  of  unions.  How  would  they  be  affected? 
"Where  would  a  system  of  exclusive  unions  place  the  non- 
union men  ?  Let  us  think  just  a  moment  what  the  future 
would  have  for  the  non-union  man  if  one  hundred  impor- 
tant trade  unions  succeeded  in  getting  all  the  workmen  in 
their  several  lines  enrolled  and  if  they  kept  down  rigor- 
ously the  number  of  persons  admitted  into  the  unions.  At 
present  they  are  trying  to  enroll  in  the  organizations 
everybody  that  practises  the  trades;  but  this  is  prelimi- 
nary. So  long  as  one  practises  the  handicraft  it  is  better 
for  the  union  to  let  him  come  in  than  to  keep  him  out.  What 
is  wanted  is  a  reduction  of  the  number  who  practise  the 
trade  at  all ;  and  that  can  come  only  when  the  organization 
becomes  complete.  Suppose  the  union  once  got  everyone 
in  and  then  began  to  make  rules  for  restricting  the  num- 
ber of  apprentices  and  for  charging  high  fees  for  the 
admission  of  newcomers  who  have  already  learned  the 
craft.  Suppose  that  it  had  committees  who  scrutinized 
severely  the  qualifications  of  men  who  claim  to  be  able  to 
practise  the  trade  and  in  one  way  or  another  kept  many 


ORGANIZED  LABOR  AND  MONOPOLY  79 

of  them  out  of  it.  By  such  a  policy  as  this  a  body  of 
affiliated  unions  would  turn  people  by  the  thousand  into 
the  unorganized  occupations.  If  a  hundred  important 
trade  unions,  each  controlling  a  vast  number  of  men, 
should  pursue  this  policy— if  they  really  gained  a  monopo- 
listic power  and  excluded  people  who  were  competent  to 
practise  the  craft,  and  prevented  others  from  learning  it — 
they  would  be  in  the  position  of  forcing  young  men  and 
old  men  into  a  limited  number  of  crowded  and  ill-paid 
occupations.  As  more  and  more  trades  became  thus 
monopolistic  the  field  open  to  the  excluded  workers  would 
become  smaller  and  smaller.  Fewer  and  fewer  would  be 
the  occupations  to  which  they  could  gain  admission  at  all, 
and  the  wages  in  these  remaining  occupations  would  be 
low.  The  condition  of  the  non-union  man  under  these 
circumstances  might  in  the  end  be  pitiful  indeed. 

Now  this  is  an  imaginary  state  of  affairs  and  it  has  not 
been  actually  realized.  It  is  very  far  from  having  been 
realized  in  any  completeness;  but  what  we  should  recog- 
nize is  that,  while  complete  organization  in  every  skilled 
craft  would  certainly  remove  the  incentive  to  violence,  it 
would  create  a  condition  in  which  there  would  be  the 
strongest  sort  of  incentive  offered  to  the  excluded  men  to 
rebel  against  the  whole  system.  The  organized  trades 
would  have  put  all  society  under  a  heavy  tribute  and 
would  have  put  the  unorganized  laborers  where  they 
could  ill  afford  to  pay  any  tribute.    A  barrier  that  could 


80  THE  PROBLEM  OF  MONOPOLY 

not  be  surmounted  would  enclose  that  economic  territory 
to  which  they  would  be  confined.  It  would  go  hard 
with  young  men  who  wished  to  learn  a  craft,  and  if  they 
failed  to  get  the  privilege  of  learning  it,  it  would  go  hard 
with  them  in  another  way  in  the  unskilled  occupations  to 
which  they  would  be  confined.  The  time  might  come 
when  such  a  condition  would  be  wholly  unendurable. 
Are  we,  then,  as  it  were,  ** between  the  devil  and  the  deep 
sea?"  Have  we  to  choose  between  a  condition  in  which 
there  is  a  grave  temptation  to  violence  and  one  in  which 
there  will  be  a  monopoly  of  the  good  fields  of  labor? 
Must  independent  workmen  enjoy  immunity  from  attacks 
at  the  cost  of  serious  oppression?  Must  we  see  growing 
up  a  "fourth  estate"  that  will  find  in  some  revolutionary 
change  its  only  hope  of  fair  treatment? 

It  looks  as-  though  this  were  the  case,  but  there  is 
ground  for  thinking  that  it  is  not  so.  A  better  outcome 
is  in  sight.  In  an  earlier  chapter  reasons  were  given  for 
hoping  that  the  great  trusts,  under  wise  legislation,  may 
continue  to  be  useful  as  producers  and  may  lose  the 
monopolistic  power  that  is  so  injurious  to  society.  This 
may  be  brought  about  by  measures  which  will  keep  open 
the  field  for  new  competitors.  Now  that  possibility  will 
be  just  as  open  in  the  case  of  a  trade  union  that  shall  in 
the  future  become  a  monopoly,  or  try  to  become  one,  as  it 
is  in  the  case  of  a  great  combination  on  the  side  of  capital. 
And  if  one-third  of  the  working  people  of  society  were  to 


OEGANIZED  LABOR  AND  MONOPOLY  81 

organize  in  a  close  corporation,  fence  its  territory  around 
and  say:  ''Nobody  shall  be  admitted  into  this  territory 
except  some  of  our  own  children,"  the  thing  that  would 
happen  would  be  that  the  independent  capitalists,  who 
are  inclined  to  enter  the  field  as  competitors  of  the  trusts, 
would  find  it  advantageous  to  start  their  new  mills  by  the 
aid  of  equally  independent  labor.  They  would  gather  a 
force  of  non-union  men,  train  them  if  necessary,  and  by 
their  aid  produce  more  cheaply  than  mills  in  the  combi- 
nation employing  union  labor  could  do.  There  would  be  a 
rivalry  between  free  capital  employing  free  labor,  on  the 
one  side,  and  monopolistic  capital  and  monopolistic  labor, 
on  the  other ;  and  if  the  monopolies  were  exacting  in  their 
demands,  they  would  be  the  losers  in  the  contest.  The  free 
mills  would  win;  and  the  efforts  of  employers  to  restrict 
the  output  of  goods  and  those  of  union  laborers  to  restrict 
the  supply  of  men  in  their  crafts  would  both  be  defeated 
by  the  competition  of  the  independent  labor  in  the  employ- 
ment of  independent  capital. 

This  is  looking  into  the  future  and  considering  proba- 
bilities rather  than  realities.  At  present  what  we  have  to 
do  with  is  a  preliminary  state— some  strikes  without  vio- 
lence, some  with  violence,  an  utterly  unsatisfactory  attitude 
of  local  officers  in  the  case  of  violence  and  a  great  loss  of 
public  sympathy  by  organized  labor.  The  country,  as  a 
whole,  does  not  now  regard  organized  labor  as  favorably 


82  THE  TROBLEM  OF  MONOPOLY 

as  it  formerly  did,  and  there  is  a  movement  to  organize 
capital  on  a  basis  on  wliieh  it  was  never  organized  before, 
namely  to  contend  with  organized  labor.  The  great  con- 
solidations of  capital  have  had  for  their  primary  purpose 
to  raise  prices.  Incidentally  they  have,  of  course,  been 
able  to  contend  with  great  efficacy  with  organized  labor, 
but  they  have  not,  in  the  main,  developed  any  violent  op- 
position to  it.  Now  we  see  all  over  the  country  bodies  of 
citizens  in  many  different  occupations  uniting  against 
organized  labor.  Why?  Because  the  present  situation 
has  put  organized  labor  in  a  false  and  indefensible  posi- 
tion, which  it  will  not  long  occupy.  We  may  be  sure  that 
the  heart  of  the  country  is  with  the  laborers  of  the  country 
and  that  it  sympathizes  thoroughly  with  the  cause  of  labor 
as  such.  We  may  be  sure  that  in  the  long  run,  it  approves 
of  the  principle  of  organization  and  will  always  approve 
of  it,  and  we  may  be  sure  that,  in  the  long  run,  the  organi- 
zation of  citizens  to  fight  unions  of  laborers  will  not  be 
necessary.  The  new  and  better  state  will  come  about 
when  this  preliminary  period  shall  have  passed  and  a  more 
settled  condition  of  things  shall  have  come.  At  present 
there  are  few  trade  unions  that  are  as  powerful  as  the 
typical  one  I  named— the  glass  blowers'  union— and  we 
cannot  speak  of  an  average  trade  union  as  having  an  effect- 
ive power  of  monopoly.  As  a  rule,  it  does  not  have  it 
except  as  it  gets  it  in  an  irregular  way  by  driving  off  men 
who,  here  and  there,  try  to  practise  their  trade.     In  a 


OBGANIZED  LABOR  AND  MONOPOLY  83 

natural  way  the  unions  are  not,  as  yet,  monopolies.  More- 
over, the  fight  at  present  is  not  chiefly  between  union 
shops  and  non-union  ones ;  in  the  main  the  fight  is  for  the 
preservation  of  what  is  called  the  open  shop,  in  which  the 
unionist  and  the  non-unionist  work  together.  Such  a 
commingling  probably  represents  a  preliminary  state.  In 
the  long  run  the  tendency  will  be  doubtless  to  separate  the 
shops,  as  completely  unionized  on  the  one  hand,  or  not  at 
all  unionized,  on  the  other.  When  that  division  occurs, 
the  same  tendency  that  holds  trusts  in  check  will  hold  in 
check  the  trade  union  whose  claims  are  extravagant ;  but 
the  power  of  the  trade  union  which  acts  within  legitimate 
lines  will  be  undiminished  and  it  will  accomplish  for  its 
members  what  the  union  was  intended  to  accomplish,  and 
that  in  a  spirit  of  loyalty  to  the  state  and  obedience  to 
law.  That  is  what  we  may  see  in  the  future  for  the  labor- 
ers of  the  country,  under  a  condition  in  which  their  organ- 
izations shall  increase  and  flourish.  The  situation  fore- 
shadows the  coming  of  some  kind  of  arbitration;  and  in 
mentioning  this,  we  encounter  a  perplexity.  Many  people 
will  say:  "Compulsory  arbitration  we  don't  want  and 
won't  have;  and  voluntary  arbitration  is  worth  nothing. 
Arbitration  without  force  behind  it  expresses  a  pious  wish 
but  lets  the  contest  go  on  if  it  must ;  while  arbitration  that 
is  completely  coercive  interferes  with  the  liberty  of  the 
citizen  by  forcing  a  laborer  to  work  when  he  does  not  wish 
to  do  so,  or  by  forcing  an  employer  to  run  his  mill  when  he 


84  THE  PEOBLEM  OF  MONOPOLY 

is  equally  unwilling  to  do  it, ' '  Are  we  in  fact  limited  to  a 
choice  between  these  alternatives?  Is  nothing  offering 
except  arbitration  which  is  impotent  and  arbitration  which 
is  tyrannical?  No;  there  is  a  middle  ground  and  a  good 
one.  "Why  is  it  that  a  powerful  union  now-a-days  is 
usually  opposed  to  any  kind  of  arbitration  and  altogether 
opposed  to  the  kind  that  is  compulsory?  The  drift  of 
sentiment  in  unions  that  are  very  strong  is  thus  because  a 
powerful  union  fears  that  it  might  get  less  by  arbitration 
than  it  can  get  without  it.  If  union  labor  is  indeed  really 
monopolistic  and  able  to  get  a  great  deal  more  than  other 
labor  can  command,  there  may  be  some  danger  that  even 
a  fair  tribunal  of  arbitration  would  not  give  the  union 
laborers  as  much  as  they  get  now.  Members  of  unions 
that  are  not  thus  powerful  and  monopolistic  have  a  great 
deal  more  to  gain  by  the  system  that  prefers  adjudication 
to  fighting,  and  men  who  are  destined  to  be  either  out  of 
unions  altogether  or  in  unions  that  are  not  monopolistic, 
have  indefinitely  more  to  gain  than  they  have  to  lose  by  ar- 
bitration. It  is  not  necessary,  however,  that  arbitration 
should  be  compulsory,  in  any  such  complete  sense  as  the 
New  Zealand  system  is  compulsory.  It  will  be  quite 
enough  if  the  law  shall  say  to  a  body  of  striking  workers : 
"We  will  recognize  your  right  to  your  positions,  provided 
we  find,  upon  investigation,  that  your  claims  are  equitable ; 
if  we  find  that  your  claims  are  not  equitable,  we  will  still 
offer  you  your  positions  in  preference  to  others  if  you 


OEGANIZED  LABOR  AND  MONOPOLY  85 

choose  to  keep  them  on  fair  terms ;  but  if  you  refuse  them 
after  this  offer,  we  will  uphold  the  officers  of  the  law  in 
enforcing  the  right  of  other  men  to  take  them.  "We  will 
see  that  peace  is  preserved  and  make  it  entirely  safe  for 
the  other  men  to  take  the  positions.  We  will  not  allow  a 
body  of  workmen  to  stand  guard  over  these  positions, 
demand  unjust  rates  of  pay  and  fight  off  men  who  will  take 
just  rates.  We  will  recognize  and  enforce  the  union  men's 
tenure  of  place  so  long  as  their  claims  are  just,  but  not 
longer."  Now,  that  is  not,  in  the  full  sense,  compulsory 
arbitration,  but  it  is  arbitration  that  has  authority  behind 
it  and  it  could  be  introduced  only  by  the  agency  of  the 
state.  We  are  not  likely,  hereafter,  to  let  ourselves  drift 
into  such  a  position  that  the  supply  of  necessary  articles 
can  be  completely  cut  off  and  the  people  suffer  for  the  lack 
of  them,  by  reason  of  disagreements  between  employers 
and  employed.  We  shall  not  allow  the  production  of  need- 
ed goods  to  be  stopped  and  permit  business  to  be  thrown 
into  disorder;  but  neither  shall  we  place  ourselves  in  a 
position  where,  in  order  to  maintain  the  continuous  supply 
of  necessary  articles,  it  shall  be  necessary  to  do  injus- 
tice to  any  body  of  workers.  We  shall  make  provision  for 
continuous  production,  for  prosperity,  and  for  the  welfare 
of  the  people  as  a  whole,  but  we  shall  make  even  more 
careful  provision  for  doing  justice  to  every  body  of  work- 
ers. The  union  man  will  get  his  rights,  though  he  may  be 
debarred  from  disorganizing  society. 


CHAPTER  V 

AGEICULTUEE  AND  MONOPOLIES 

It  is  a  very  sharp  division  that  monopoly  draws  through 
society.  He  that  is  not  for  it  is  against  it ;  and  that  means, 
in  practice,  that  everyone  who  is  not  in  some  way  sharing 
the  profits  of  the  monopoly  finds  it  to  his  interest  to  curtail 
its  power.  And  yet  its  power  has  thus  far  been  held  in 
check  chiefly  by  the  natural  action  of  that  potential  com- 
petition which  has  already  been  described,  and  not  by  the 
positive  action  of  the  civil  law.  This  is  because  of  the 
difficulty  of  securing  legislation  which  is  wanted  and  of 
executing  laws  which  are  passed.  Corporations  have  a 
large  power  over  the  political  machinery.  Nevertheless, 
there  is  one  great  division  of  the  people  of  the  United 
States  which  is  able  to  act  with  some  degree  of  organiza- 
tion and  with  great  effectiveness,  and  from  the  very  first 
has  used  its  power  steadily  against  the  growth  of  monopo- 
lies. I  will  not  say  that  it  has  always  used  it  wisely ;  but  in 
the  main  it  has  acted  in  the  right  general  direction  and  to- 
day it  offers  the  only  available  nucleus  of  a  party  that  shall 
be  strong  enough  and  united  enough  to  accomplish  much 
in  the  way  of  reducing  injurious  monopolies  to  useful  ser- 
vants.   It  consists  of  the  agricultural  class.     It  is  to  the 


AGEICULTUEE  AND  MONOPOLIES  87 

farmers  of  the  United  States,  and  mainly  in  the  western 
states,  that  we  must  look  for  the  action  that  will  restore 
industries  elsewhere  to  a  sound  state.  This  class  has  no 
divisions  that  destroy  its  efficiency  in  this  particular  con- 
test, and  though  it  has  diversities  of  view  on  many  sub- 
jects, it  is  able  to  act  as  a  unit  when  monopolies  are  to  be 
dealt  with.  So  much  cannot  be  said  of  any  other  large 
class.  Of  almost  any  other  general  class  that  has  a  large 
voting  power,  you  may  safely  say  that  some  portion  is 
enlisted  on  the  side  of  monopoly  and  that  this  fact  makes 
united  action  impossible. 

The  farmer  is  hit  by  monopoly  in  more  ways  than  one. 
In  the  spending  of  his  money  he  feels  the  effect  of  high 
prices,  in  the  selling  of  his  grain  or  cotton  or  tobacco,  he 
feels  the  effect  of  low  prices  of  raw  material— for  what  he 
furnishes  is  virtually  a  raw  material,  and  much  of  this  is 
bought  by  the  agents  of  consolidated  capital.  He  gets 
reduced  prices  for  what  he  has  to  sell  and  pays  high  ones 
for  what  he  has  to  buy  in  consequence  of  the  action  of  those 
consolidations,  for  which,  naturally,  he  has  no  friendly 
feeling. 

A  farmer  is  very  largely  a  workingman  and  much  of 
what  he  gets  from  his  farm  is  wages.  It  is  true  he  is  his 
own  employer,  and  yet,  as  he  tills  his  farm  and  sees  the 
price  of  produce  declining,  he  feels  much  as  a  workman 
would  feel  when  general  wages  go  down.  If  he  were  only 
hiring  other  men  and  setting  them  at  work  on  his  land,  he 


88  THE  PROBLEM  OF  MONOPOLY 

might  see  a  certain  advantage  in  low  wages;  but  as  he 
does  the  work  largely  by  himself  or  with  the  help  of  his 
sons,  he  takes  the  opposite  view,  and  wants  to  see  his 
wages  and  his  sons'  wages  rise.  As  all  wages  except  those 
of  men  in  the  employment  of  monopolies  are  reduced  by 
the  monopolies'  action,  those  of  agricultural  labor  are  so. 
As  a  worker,  as  a  vender  of  produce  and  as  a  buyer  of 
goods  the  farmer  pays  his  tribute  to  trusts  whenever  they 
are  really  monopolistic. 

Now  the  farmers  began  to  organize  before  the  trust 
was  prominent  enough  to  present  what  is  called  a  ''burn- 
ing question."  There  were  consolidations  forming,  but 
they  had  not  become  numerous  or  very  menacing  to  the 
farmers'  interests.  The  early  organization  of  the  farmers 
was  worth  much  to  them  because  of  the  amount  of  experi- 
ence which  it  gave  them  in  collective  action.  This  first 
general  organization  began  almost  immediately  after  the 
Civil  War.  It  was  in  1867  that  Mr.  Kelly,  an  employee  of 
the  government  at  Washington,  took  an  extended  trip 
through  the  southwestern  states  and  returned  with  the 
conviction  that  many  farmers  were  in  a  deplorable  state, 
which  would  be  relieved  if  they  were  united  in  an  efficient 
organization.  He  determined  to  bring  them  into  such  a 
union  and,  calling  to  his  aid  Mr.  Ireland  and  Mr.  Saunders, 
residents  of  Washington,  he  founded  the  order  of  the 
Patrons  of  Husbandry. 

Now  many  a  man  has  organized  in  his  own  house  a 


AGETCIJLTUEE  AND  MONOPOLIES  89 

little  society  of  which  he  had  large  anticipations,  which 
anticipations  have  come  to  grief ;  and  very  few  such  socie- 
ties quietly  created  by  two  or  three  men  in  a  private  dwell- 
ing have  had  such  a  brilliant  growth  and  exercised  such  a 
permanent  influence  as  has  this  order  of  the  Patrons  of 
Husbandry.  Messrs.  Kelly,  Ireland  and  Saunders  soon 
had  reason  to  be  astonished  at  the  result  of  their  work. 
By  1874  the  Patrons  of  Husbandry,  otherwise  called  the 
Grangers,  were  represented  in  very  many  states  and  terri- 
tories, and  the  little  organization  at  Washington  had  be- 
come almost  national  in  its  extension.  Local  granges  were 
scattered  over  the  states  and  state  granges  were  consti- 
tuted by  the  local  granges. 

The  organizers  had  given  to  the  body  an  elaborate 
ritual  and  made  it,  at  the  outset,  a  secret  society.  The 
ritual  had  its  attractions  and  the  constitution  afforded 
offices  enough  to  offer  further  attractions,  while  the  orders 
to  which  a  member  could  attain  seemed  to  bring  a  modest 
quasi-nobility  within  the  reach  even  of  a  slender  purse. 
Four  orders  could  be  conferred  by  a  local  grange,  those, 
namely,  of  laborer,  cultivator,  harvester  and  husbandman. 
One  could  get  them  all  for  five  dollars;  and  there  were 
parallel  titles  for  women  which  could  be  had  for  two 
dollars.  All  this  played  a  useful  part  in  attracting  people, 
holding  their  interest  and  keeping  up  periodical  meetings 
even  when  there  were  no  very  great  issues  pending.  In 
1874  there  were  said  to  be  something  like  twenty  thousand 


90  THE  PROBLEM  OF  MONOPOLY 

local  granges  in  the  United  States,  and  over  a  million  and 
a  half  of  members— a  very  large  growth  to  come  out  of 
that  quiet  meeting  of  the  three  gentlemen  in  Washington. 

The  constitution  of  this  body  had  an  interesting  pre- 
amble which  scarcely  gives  any  idea  of  what  was  practi- 
cally undertaken,  though  it  well  reflects  the  general  spirit 
of  the  organization.  It  showed  a  certain  breadth  of  mind 
and  elevation  of  aim.  The  order  endeavored  to  promote 
brotherhood,  and  within  the  limits  of  its  membership  it 
did  so  to  a  very  satisfactory  degree.  It  performed  works 
of  beneficence  and  created  a  better  social  atmosphere  than 
had  formerly  existed  in  parts  of  the  country  in  which  it 
flourished ;  but  the  practical  thing  that  it  meant  to  do  and 
did  do  was  to  make  war  upon  the  railroads. 

There  is  not  here  space  to  describe  the  so-called  granger 
laws,  whereby  this  organization  sought  to  curb  the  power 
and  reduce  what  it  believed  to  be  the  extortion  of  the 
western  railroads.  It  declared  emphatically  that  it  made 
"no  war  against  railroads  as  such;"  but  it  had  a  war  to 
wage  against  the  corporations  as  they  were  conducted. 
Conceding  that  men  who  built  railroads  had  a  right  to  an 
honest  return  for  genuine  investments,  the  grangers  de- 
clared that  men  who  projected  roads,  got  the  money  for 
them  out  of  other  people's  pockets  and  issued  stock  to 
themselves  for  which  they  paid  nothing,  had  no  especially 
good  right  to  a  large  return  on  that  stock.  They  declared 
that  railroads  had  no  right  to  earn  money  enough  from  the 


AGEICULTUKE  AND  MONOPOLIES  91 

farming  classes  and  others  to  pay  ten  per  cent,  dividends 
on  highly  watered  capital,  and  the  laws  which  they  enacted 
were  for  the  most  part  designed  to  reduce  the  charges  for 
railroad  transportation.  These  laws  ran  the  gauntlet  of 
the  courts  and  at  present  the  principle  appears  to  be  estab- 
lished that  a  legislature  cannot,  in  this  way,  go  to  the 
length  of  confiscating  honest  property,  but  within  this 
limitation  may  enact  laws  in  the  direction  of  curbing 
extortionate  charges. 

Now  this  did  not  accomplish  all  that  the  grangers  had 
in  view.  There  was  a  strong  movement  for  the  inflation 
of  the  currency,  since  the  trinity  of  enemies  recognized  by 
the  farmers  of  the  west  at  that  time  and  afterwards  con- 
sisted of  the  railroads,  the  middlemen,  and  the  banks. 
They  were  long  hostile  in  spirit  to  the  national  banks  and 
this  is  one  illustration  of  the  fact  that  they  have  been  easily 
led  to  attack  unreal  enemies  instead  of  real  ones.  Tilting 
at  windmills,  using  good  strength  and  energy,  which  might 
have  been  saved  for  attacking  injurious  monopolies,  in 
attacking  things  whose  disposition  to  do  injury  was  imag- 
inary, has  been  their  occasional  occupation.  In  so  far, 
however,  as  the  grangers  effectually  began  a  course  of 
railroad  legislation,  the  outcome  of  what  they  did  has  been 
exceedingly  good.  We  can  trace,  first,  the  Interstate 
Commerce  Law,  and  secondly  the  creation  of  the  Inter- 
state Commerce  Commission  to  the  influence  of  the  farm- 
ers and  that,  in  turn,  was  largely  due  to  the  extent  of  their 


92  THE  PEOBLEM  OF  MONOPOLY 

organization.  As  far  as  they  were  hostile  to  banks  it  was 
because  of  a  nonfused  idea  of  the  power  of  the  banks  to 
regulate  the  volume  of  the  currency  and  the  prices  of 
produce.  They  actually  thought  there  was  a  conspiracy 
on  the  part  of  bankers  to  keep  up  the  rate  of  interest  and 
to  keep  down  the  prices  of  farmers'  products.  Fortunate- 
ly the  legislation  which  in  this  early  day  they  demanded 
did  not  result  in  abolishing  the  national  banking  system 
and  either  restoring  the  wretched  system  of  state  banks 
which  had  preceded  it,  or  making  the  government  the  sole 
issuer  of  notes  and  the  regulator  of  the  volume  of  the  cur- 
rency. For  the  failure  of  some  of  their  blind  efforts  and 
the  success  of  some  intelligent  ones  the  country  has  reason 
to  be  thankful.  If  we  credit  them  with  the  enactment  of 
the  Interstate  Commerce  Law  and  the  creation  of  the 
Interstate  Commerce  Commission  we  have  to  thank  them 
for  a  very  great  deal  and  we  owe  the  grangers  much ;  and 
we  owe  them  still  more  for  furnishing  an  example  of 
organization  which  was  followed  by  a  still  more  powerful 
body,  which  shortly  afterwards  entered  the  field.  This 
more  powerful  body  has  borne  the  name  of  the  Farmers* 
Alliance  and  its  activity  was  later  than  that  of  the  granges. 
It  had  a  brief  career,  but  the  effect  of  its  acts  survives. 

In  1882  there  was  formed  in  the  state  of  Arkansas  an 
organization  which  was  known  as  "The  "Wheel."  This 
peculiar  name  has  several  possible  origins,  but  was  prob- 
ably selected  because  it  suggests  union  and  concurrent 


AGEICULTUEE  AND  MONOPOLIES  93 

action.  Some  years  earlier,  in  the  state  of  Texas,  there 
was  organized  a  body  known  as  the  Farmers'  Alliance. 
After  a  number  of  years  it  became  a  state  organization. 
By  that  time  the  so-called  Wheel  had  extended  itself  over 
all  the  states  adjacent  to  Arkansas,  and  there  had  also 
grown  up,  in  the  state  of  Louisiana,  an  organization  known 
as  the  Farmers '  Union  which,  in  the  year  1887,  united  with 
the  Farmers'  Alliance  of  Texas  and  took  the  name  of  the 
National  Farmers'  Alliance  and  Cooperative  Union  of 
America.  In  1888  this  body  held  a  joint  meeting  with  the 
Arkansas  Wheel  in  the  little  town  of  Meridian,  Miss.,  and 
in  the  following  year  there  was  formed  the  consolidation 
of  these  organizations  which  took  the  name  of  the  Farmers' 
Alliance  and  Industrial  Union  and  spread  through  the 
southern  and  western  states,  enlisted  innumerable  mem- 
bers, made  vigorous  demands  upon  the  government  and 
gave  shape  to  the  Populist  movement  which  was  started 
in  Cincinnati  in  1891. 

It  was  in  1889  that  this  body  held  a  great  meeting  in 
St.  Louis  to  which  still  other  organizations  who  were  in 
sympathy  with  the  movement  sent  delegates.  The  Knights 
of  Labor  were  represented  at  this  meeting,  though  they 
were  not  a  part  of  the  organization.  There  were,  at  this 
time,  associations  of  farmers  in  the  northwestern  states 
which  were  similar  in  name  and  purpose  to  this  great 
southwest  body,  but  were  not  formerly  merged  in  it.  At 
this  meeting  in  St.  Louis  there  was  formulated  a  platform 


94  THE  PEOBLEM  OF  MONOPOLY 

for  political  action  which  served  as  the  basis  of  the  political 
action  which  was  started  in  Cincinnati  two  years  later. 
The  St.  Louis  ** demands"  were  in  substance  reaffirmed 
in  Ocala,  Florida,  in  1890,  and  gave  character  to  the 
platform  adopted  in  Cincinnati  in  1891. 

One  of  the  demands  thus  repeatedly  made  was  the 
abolition  of  the  national  banks;  and  there  are  not  many 
people  now  who  do  not  consider  it  fortunate  that  that 
measure  was  not  enacted;  nor  are  there  at  present  very 
many  who  do  not  regard  with  equanimity,  if  not  with 
pleasure,  the  further  demand  that  the  United  States  should 
issue  money  enough  to  enable  the  people  to  "do  business 
on  a  cash  basis." 

"Whatever  we  may  think  of  the  economic  views  of  the 
farmers  of  1889  we  can  sympathize  with  their  desire  to 
be  able  to  pay  debts  and  do  business  for  cash.  It  appeals 
to  our  sympathies  to  see  a  class  of  persons  on  whom  there 
rest  terrible  burdens  catching  at  an  expedient  which,  on 
its  face,  seemed  to  promise  to  enable  them  to  throw  the 
burdens  off,  though  at  the  cost  of  doing  untold  damage  in 
other  directions.  Inflation  carried  to  great  lengths  would 
have  helped  the  farmers  to  pay  long-standing  debts.  Let 
us  concede  so  much  to  the  measure  and  to  the  economic 
insight  of  its  authors.  The  farmers  formed  an  accurate 
judgment  as  to  the  effect  of  an  inflation  of  the  currency 
on  the  price  of  grain,  cotton,  tobacco,  etc.  These  prices 
were  anything  but  satisfactory  during  the  ten  years  ter- 


AGEICULTUEE  AND  MONOPOLIES  95 

minating  in  1891,  and  those  who  had  bought  farms  at  the 
high  prices  prevailing  just  after  the  conclusion  of  the  war 
and  then  saw  the  products  of  those  farms  growing  cheaper 
and  cheaper,  found  it  harder  and  harder  to  make  the  pay- 
ments of  purchase  money  which  they  had  engaged  to  make. 
If  now  the  government  had  flooded  the  country  with  paper 
money,  there  would  have  been  an  artificial  rise  of  prices. 
Grain  would  have  sold  at  home  for  higher  prices  in  paper 
than  it  would  have  commanded  abroad  in  gold,  and  the 
paper  could  he  used  in  paying  old  debts.  Therein  the 
farmer  reasoned  correctly ;  and  while  there  is  a  question  as 
to  the  morality  of  the  measure,  there  is  none  as  to  the  help 
it  would  have  afforded  to  debtors.  The  effect  on  creditors 
and  on  men  who  live  on  fees,  salaries  or  ordinary  wages 
is  another  story.  It  would  have  had  its  effects— particu- 
larly bad  ones— on  those  who  had  deposits  in  savings  banks 
or  life  insurance  policies.  All  deposits  in  banks  would 
have  been  reduced  in  value  as  the  money  with  which  the 
deposits  were  payable  was  cheapened;  and  very  grave 
effects  on  the  business  of  the  country  would  have  been 
produced. 

There  is  no  possible  condition  that  is  so  disastrous  for 
honest  interests  in  the  country  as  a  condition  of  contrac- 
tion following  a  period  of  inflation.  Something  equivalent 
to  such  a  state  existed  after  the  Civil  War.  During  the 
war  we  had  the  inflation;  and  after  it  we  had  not  much 
actual  shrinkage  of  the  currency,  but  a  great  growth  of 


96  THE  PEOBLEM  OF  MONOPOLY 

business;  and  that  was  equivalent  to  a  contraction.  We 
had  falling  prices,  as  the  value  of  the  greenbacks  slowly- 
climbed  toward  a  parity  with  that  of  gold,  and  it  was  the 
falling  prices— or  the  increasing  value  of  paper  money — 
that  burdened  those  farmers  who  had  bought  land  in  the 
years  when  all  prices  were  high.  If,  to  ease  them  of  their 
burdens,  the  government  had  introduced  another  reign  of 
inflation,  it  would  in  all  probability  have  been  followed 
by  another  period  of  falling  prices  and  the  whole  disaster 
would  have  been  suffered  again.  No  government  could 
continue  to  enlarge  the  volume  of  paper  money  and  keep 
prices  rising  to  the  end  of  time.  Very  lucky  it  was  that 
the  Populists  did  not  induce  the  government  to  snow  the 
country  under  with  such  paper. 

There  was  a  demand  for  the  free  coinage  of  silver,  for 
the  belief  was  spreading  that  there  had  been  a  conspiracy 
to  get  silver  out  of  the  coinage.  The  emphasis  laid  on 
this  charge  came  later,  but  the  suspicion  and  the  effort  to 
secure  free  coinage  came  at  this  early  date.  It  was  an- 
other serious  error  and  it  was  greatly  to  the  advantage  of 
the  countrj'-  that  the  demand  was  not  conceded.  There 
was  a  call  for  a  constitutional  amendment,  forbidding  the 
chartering  of  banks  of  issue  and  requiring  the  election  of 
presidents,  vice-presidents  and  postmasters  by  the  popu- 
lar vote.  Grouping  these  officials  together  affords  one  of 
the  humors  of  the  situation,  but  the  farmers  were  practical 
here  and  they  wanted  to  sweep  away  a  mass  of  real  cor- 


AGEICULTUEE  AND  MONOPOLIES  97 

ruption,  which  follows  the  appointment  of  postmasters  as 
a  measure  of  patronage.  Not  altogether  bad  as  a  plank 
in  any  platform  is  this  particular  demand. 

The  farmers  asked  for  a  commission  to  give  effect  to 
the  Interstate  Commerce  Law.  They  ultimately  got  it, 
and  profoundly  thankful  we  should  be  to  them,  as  we 
should  be  also  for  their  initiation  and  steady  support  of  the 
policy  of  curbing  the  power  of  trusts.  These  combinations 
had  not  then  made  themselves  so  menacing  as  they  have 
since  and  the  anti-trust  laws  actually  passed  have  been 
anything  but  good ;  and  yet  the  demand  for  some  legisla- 
tion of  this  general  kind  was  a  discerning  and  thoroughly 
right  demand.  Exactly  the  kind  of  anti-trust  laws  which 
the  farmers  in  time  secured  will  probably  not  be  perma- 
nent, for  the  drastic  prohibition  of  all  sorts  of  combina- 
tions would  work  harm  in  business.  Nevertheless  we  may 
even  rejoice  that  many  such  unintelligent  statutes  have 
been  enacted  for  they  may  make  trouble  enough  to  make 
even  the  trusts  themselves  willing  to  see  a  sound  method  of 
regulation  adopted.  The  policy  that  seeks  rudely  to 
break  them  up  is  anything  but  sound.  Their  power  should 
be  retained  and  the  evil  disposition  should  somehow  be 
taken  out  of  them;  but  it  will  not  be  easy  to  accomplish 
this  unless  the  trusts  themselves  perceive  that  a  worse 
alternative  impends  over  them.  In  this  view  only  should 
we  be  glad  to  see  the  drastic  and  unwise  statutes  that  in 
many  states  have  been  enacted,  executed  to  a  sufficient 


98  THE  PROBLEM  OF  MONOPOLY 

extent  to  bring  the  consolidations  themselves  to  reason 
and  make  them  consent  to  legislation  that  will  give  them 
honest  profits  without  dishonest  ones.  We  have  to  thank 
the  farmers  for  a  great  deal.  Their  demands  were  for 
things  good  and  evil  in  a  strange  mixture,  but  the  evil  ones, 
for  the  most  part,  failed  of  enactment  and  the  great  good 
was  accomplished  of  setting  in  activity  an  organization 
that  was  strong  enough  and  united  enough  to  make  some 
headway  against  the  sinister  influence  of  trusts.  To  in- 
dicate the  character  of  this  organization  and  the  possibili- 
ties of  similar  ones  in  the  future  has  been  the  object  of  the 
hasty  sketch  here  given  of  the  doings  of  the  granges  and 
the  Farmers'  Alliance.  Men  who  have  rightly  opposed 
their  effort  to  inflate  the  currency  with  paper  and  to 
debase  the  standard  on  which  the  value  of  the  paper  de- 
pends have  abundant  reason  to  thank  them  for  proving 
that  the  plain  people  can  still  make  themselves  felt  in 
politics  in  a  way  that  monopolies  must  respect. 

It  so  happened  that  there  was  in  the  minds  of  the  farm- 
ers of  '89  to  '91  one  specific  measure  on  which  they  had 
earnestly  set  their  hearts.  It  was  endorsed  with  enthu- 
siasm at  St.  Louis  in  '89,  and  in  Ocala  in  '90 ;  and  it  was 
prominent  in  the  platform  adopted  in  Cincinnati  in  '91. 
It  was  the  so-called  sub-treasury  scheme.  Here,  it  must 
be  confessed,  the  farmers  lost  their  heads  and  used  very 
good  strength  to  very  little  purpose.  They  tilted  Quixote- 
like against  a  windmill  and  suffered  the  Spanish  hero's 


AGRICULTUEE  AND  MONOPOLIES  99 

fate.  They  resembled  him  in  the  grotesqueness  of  steed, 
weapons  and  armor  and  in  the  absurdity  of  their  attack 
and  its  result.  If  we  judge  the  farmers  by  the  sub-treas- 
ury scheme  we  shall  be  in  danger  of  losing  the  respect  for 
them  which  their  sounder  measures  and  the  greatness  of 
their  political  power  deserve. 

Bad  as  this  scheme  was,  it  grew  out  of  a  condition  in 
the  south  under  which  many  farmers  were  terrible  suffer- 
ers and  from  which  it  was  eminently  right  that  they  should 
try  to  escape.  The  condition  of  the  small  agriculturist  in 
the  south  after  the  Civil  War  was  partly  the  inheritance 
of  the  plantation  system,  under  which  even  a  wealthy  man 
might  depend  for  ready  money  on  the  factor  who  sold  his 
crops.  A  draft  on  this  factor,  to  be  charged  against  the 
forthcoming  crop,  brought  the  cash.  If  the  cotton  did  not 
suffice  to  meet  the  accumulated  drafts,  the  sale  of  a  few 
slaves  would  do  it,  and  therefore  the  advances  of  money 
were  reasonably  secure.  After  the  war  the  slaves  were, 
fortunately,  no  longer  property,  and  the  man  had  nothing 
but  his  crop  to  depend  on.  A  class  of  small  owners  and 
tenant  farmers  grew  up  and  needed  every  spring  advances 
in  the  way  of  supplies  to  carry  them  through  the  season. 
For  these  advances  they  applied  to  the  local  merchants 
who  had  taken  the  place  of  the  cotton  factors,  doing  all 
over  the  country,  on  a  small  scale,  what  the  factors  in  the 
central  towns  had  been  in  the  habit  of  doing  on  a  large 
scale.    They  made  advances  to  the  farmer  and  got  pretty 


100  THE  PROBLEM  OF  MONOPOLY 

round  interest  for  them.  Various  computations  have  been 
made  by  southern  men  of  the  actual  rate  of  interest  which 
these  farmers  were  compelled  to  pay,  but  much  of  it  was 
disguised  and  not  accurately  computable.  It  did  not 
appear  openly  in  the  form  of  a  percentage.  Ten  per  cent, 
for  an  advance  of  any  sort,  however  long  it  was  to  run, 
was  not  uncommon.  Now  if  you  make  an  advance  of  ten 
per  cent,  in  planting  time,  the  farmer  will  not  take  the 
goods  all  at  once,  but  will  take  them  in  instalments,  from 
time  to  time  through  the  season.  The  average  length  of 
time  which  the  different  advances  have  to  run  is  much  less 
than  the  entire  season  and  ten  per  cent,  will  be  a  pretty 
stiff  interest  to  pay  for  them.  Since,  however,  the  advance 
is  made,  not  in  money,  but  in  the  form  of  credit  on 
the  books  of  a  cross-roads  store,  the  storekeeper  has  the 
farmer  so  entirely  in  his  power  that  the  latter  cannot  buy 
things  elsewhere  and  is  in  a  position  where  he  has  to  pay 
a  pretty  large  price  for  whatever  he  buys.  Thus  he  has 
another  kind  of  interest  to  pay  in  the  shape  of  an  abnormal 
profit  on  goods  furnished.  The  quality  of  the  goods  kept 
by  the  store  is  not  up  to  the  mark,  and  as  the  customer  has 
to  buy  what  the  storekeeper  happens  to  have,  his  prefer- 
ences are  not  likely  to  be  well  met.  It  has  been  asserted 
that  men  who  were  in  the  habit  of  wearing  number  nine 
shoes  might  often  be  forced  to  take  number  ten  because 
the  supply  of  their  customary  size  was  exhausted.  The 
farmer's  wife  could  not  exercise  her  taste  in  the  matter  of 


AGEICULTUEE  AND  MONOPOLIES  101 

goods  for  dresses,  nor  expect  to  secure  for  members  of  her 
family  clothing  which  resembled  the  styles  depicted  in  the 
fashion  books.  Any  style,  however  old,  had  to  do.  Now, 
if  one  computes  the  possibilities  of  cost  to  the  farmer  of 
an  advance  that  would  carry  him  through  the  planting 
and  growing  season,  he  sees  that  it  would  not  take  a  very 
large  advance  of  money  to  'eii^bi'e'  a  ,-m,erchaiit  to  get,  in 
repayment,  the  whole  of  the" farmer^'f? 'crop;';  ife'^^Q  about 
that  many  of  the  farmers'^  were  in  debt  year  after  year, 
and  constantly  under  what  came  to  be  called  the  "anacon- 
da mortgages" — the  mortgage  which  extends  its  folds 
about  everything  the  victim  has  and  crushes  the  life  out 
of  him.  It  was  common  for  a  farmer  to  find,  reckoning 
up  in  the  fall  his  account  with  the  merchant,  that  he  was 
still  in  the  latter 's  debt.  The  merchant  having  taken  the 
man's  whole  crop  had  a  certain  claim  on  the  next  one ;  and 
the  farmer  was  somewhat  in  the  position  described  in  the 
story  called  "Colonel  Carter  of  Cartersville. "  One  of  the 
characters  in  this  tale  wrote  a  letter  to  ask  for  an  advance 
"not  on  the  crop  that  he  had  planted  that  year,  but  on  the 
one  he  intended  to  plant  the  following  year." 

The  sub-treasury  scheme  was  the  planter's  reply  to 
the  doings  of  the  new  type  of  factor.  He  wanted  the  gov- 
ernment to  come  in  and  make  the  needed  advances;  and 
he  had  a  scheme  which  he  thought  would  enable  the  gov- 
ernment to  do  it.  The  demand  for  it  was  made  vigorously 
and  repeatedly,  but  it  never  had  for  more  than  about  a 


102  THE  PROBLEM  OF  MONOPOLY 

year  or  two  any  firm,  real  hold  on  the  general  body  of 
farmers.  There  were  two  reasons  for  the  early  abandon- 
ment of  the  scheme.  First,  it  was  dimly  perceived  that 
the  plan  could  not  be  made  to  work  and,  secondly,  nature 
that  was  very  kind  to  the  American  farmer— and  not,  just 
at  that  time,  kind  to  the  foreign  farmer— gave,  in  the  year 
1891,  short  xjiops  ij?.  j'oreign  countries  and  big  ones  in 
Americfi,  §o  that  we-  had  the,  unusual  combination  of  enor- 
mous crops  selling  at  very  high  prices.  Usually,  we  have 
either  a  big  crop  selling  at  a  low  price,  or  a  small  crop 
selling  at  a  high  one ;  but  here  we  had  the  big  crop  and  the 
high  prices  at  once ;  and  it  probably  put  almost  four  and 
a  half  billions  of  dollars  into  the  pockets  of  the  agricultural 
class.  It  came,  not  as  an  advance  to  be  repaid  at  some 
future  time,  but  as  an  outright  gift  from  abundant  nature 
—something  which  the  tillers  could  have  and  hold.  A 
farmer  could  now  pay  his  debts  and  go  on  his  way  rejoic- 
ing in  the  fact  that  the  factor  no  longer  had  much  of  a  grip 
on  him.  It  so  happened  that,  while  the  crop  of  '92  follow- 
ing that  of  '91,  did  not  bring  in  quite  as  much  money  to 
the  farmer  as  that  of  the  preceding  year,  it  nevertheless 
brought  in  a  great  deal  and  the  gains  of  the  two  years  were 
the  beginning  of  a  period  of  good  times  for  the  agricultur- 
ists. They  have  gone  on  paying  debts,  and  while,  in  the 
southern  states,  the  crop  mortgage  system  is  not  abolished, 
the  evils  of  it  are  very  greatly  mitigated.  The  rate  of 
interest  is  lower  than  it  was,  and  the  whole  situation  is  so 


AGRICULTURE  AND  MONOPOLIES  103 

greatly  improved  that  no  one  now  looks  to  such  a  desperate 
scheme  as  that  of  the  so-called  sub-treasury  to  afford  relief. 
It  is  best  to  describe  this  scheme  only  in  a  brief  way, 
before  speaking  of  the  general  situation  resulting  from  the 
farmers'  movements.  It  was  gravely  proposed  that  the 
government  should  build  in  every  county  in  the  United 
States  where  as  much  as  a  half -million  dollars'  worth  of 
agricultural  products  of  an  imperishable  kind  is  produced, 
a  warehouse  big  enough  to  store  this  produce.  The  farmer 
should  have  permission  to  bring  to  the  warehouse  his  grain, 
cotton,  tobacco  or  anything  that  could  be  safely  stored, 
and  get  from  the  government  an  advance  of  eighty  per 
cent,  of  its  market  value,  paying  interest  on  the  advance 
at  two  per  cent.  only.  For  a  rate  of  interest  which  to  him 
was  so  small  that  it  seemed  like  nothing  at  all,  he  could 
have  most  of  the  price  of  his  produce  and  still  own  the 
produce  and  could  take  possession  of  it  at  his  pleasure. 
By  returning  his  warehouse  receipt  and  the  amount  of 
money  advanced  to  him  he  could  take  his  products  from 
the  warehouse  for  sale  or  for  use.  One  object  of  the 
scheme  was  to  enable  him  to  hold  his  grain,  cotton,  etc., 
as  long  as  he  wished,  in  order  to  sell  it  later  at  a  good 
price,  and  it  is  easy  to  see  that  he  would  have  been  able  to 
sell  it  before  long  at  a  very  good  price  indeed.  With  the 
amount  of  paper  money  in  circulation  which  the  govern- 
ment would  have  had  to  issue,  the  prices  would  have  soared 


104  THE  PEOBLEM  OF  MONOPOLY 

skyward  in  such  a  way  that  it  woiikl  have  been  impossible 
to  follow  their  course  without  a  telescope. 

The  advances  were  to  be  made  by  the  simple  process 
of  issuing  paper  money,  and  by  the  time  that  the  govern- 
ment had  built  the  warehouses  and  received  about  a  half  of 
the  available  crops  it  would  have  issued  so  much  of  this 
that  prices  might  be  doubled.  To  make  the  eighty  per 
cent,  advances  on  the  remaining  half  of  the  crops  would 
then  take  as  much  money  as  would  originally  have  been 
required,  with  money  on  a  gold  basis,  to  make  the  advance 
on  the  whole.  The  more  produce  came  into  the  ware- 
houses the  more  paper  would  be  thrust  into  circulation 
and,  on  the  supposition  that  the  quantity  theory  of  money 
held,  as  the  farmers  always  insisted  that  it  would,  high- 
er and  higher  would  have  gone  the  prices ;  and  one  is 
tempted  to  wonder  whether  their  upward  flight  would 
have  been  stopped  by  anything  short  of  the  exhaustion  of 
the  supply  of  paper  pulp  material  or  the  covering  over  of 
the  surface  of  the  earth  so  deeply  with  currency  as  to  in- 
terfere with  agricultural  operations.* 

The  plan  was  not  long  advocated.  It  was  as  though 
some  millions  of  persons  uttered  a  wild  whoop  for  it  and 
then  began  to  have  misgivings.  A  conviction  that  it  would 
not  work  began  to  spread,  and  the  kindly  act  of  nature  in 
giving  the  farmers  a  big  crop  and  high  prices,  and  so 

*N0TE.— It  should  be  said  that  the  more  intelligent  advocates  of  the  sub- 
treasury  plan  hoped,  by  limiting  the  time  during  which  the  notes  issued  for 
deposits  of  produce  should  be  allowed  to  circulate,  to  prevent  them  fronj 
greatly  inflating  prices. 


AGKICULTUEE  AND  MONOPOLIES  105 

making  it  altogether  unnecessary,  did  the  rest.  Kind 
nature  came  to  the  rescue  at  a  later  date,  when  the  Popu- 
lists, who  were  the  political  heirs  of  the  Farmers'  Alliance, 
fought  a  violent  fight  for  the  free  coinage  of  silver.  In  this 
instance  it  was  not  done  by  providing  large  crops  but  by 
furnishing  so  much  gold  that  any  one  could  see  that  we  did 
not  need  to  depend  on  silver  to  accomplish  everything  that 
was  desirable  in  the  way  of  increasing  the  amount  of 
money  in  circulation.  The  fact  that  there  is  plenty  of 
gold  mined  does  not  bring  it  into  a  farmer's  pocket  unless 
he  has  something  to  sell  for  it ;  but  a  conjunction  of  good 
crops  and  an  ample  currency  does  make  debt  paying  easy 
and  farming  prosperous. 

The  object  of  this  hasty  review  of  agrarian  movements 
is  to  show  where  we  must  look  for  a  political  force  great 
enough  to  offset  the  power  of  monopolies  and  capable, 
when  it  acquires  the  necessary  insight,  of  action  which  will 
put  the  entire  country  under  obligations.  The  foolish 
parts  of  the  early  platforms  have  been  thrown  away  and 
the  wiser  parts  have  been  retained.  We  have  the  Inter- 
state Commerce  Law  and  the  commission  charged  with 
applying  it.  This  commission  has  not  as  much  power  as 
it  needs  and  does  not,  as  yet,  get  more ;  for  railroads  are 
a  power  in  national  politics.  Moreover  the  policy  which 
we  shall,  in  the  end,  adopt  has  not  yet  been  decided  on. 
"We  should  not  have  started  on  a  road  that  leads  to  success 
if  it  had  not  been  for  the  farmers ;  and  if  we  are  3ver  able 


106         THE  PROBLEM  OF  MONOPOLY 

to  follow  the  road  to  a  happy  goal,  this  further  progress 
will  be  due  to  them. 

In  the  original  demand  made  at  Meridian,  Mississippi, 
there  was  a  clause  demanding  an  anti-trust  law,  which 
attracted  less  attention  than  others ;  and  we  have  secured 
a  national  law  of  this  kind,  which  shares  the  experimental 
and  blundering  ({uality  of  much  legislation  in  new  fields. 
Our  policy  is  not  as  discriminating  and  as  wise  as  we  should 
like  to  have  it.  If,  however,  the  anti-trust  laws  were 
enforced  in  every  state  in  which  they  have  been  enacted 
and  in  the  federal  union,  we  should  probably  see  the  trusts 
petitioning  Congress  and  legislatures  to  make  sound  and 
scientific  trust  laws  to  take  the  place  of  the  existing  laws. 
Either  with  the  consent  of  the  trusts  or  against  their  oppo- 
sition we  must  enact  laws  that  will  save  them  from  the  fate 
that  overtakes  unendurable  institutions.  With  their 
monopolistic  power  unchecked  they  will  be  unendurable. 
It  is  the  farmers  who  have  gone  a  few  steps  along  a  road 
marked  out  at  random,  yet  leading  to  the  goal  of  a 
free  and  prosperous  system  of  industry;  and  the  guide- 
boards  they  have  set  up  are  of  use  to  all  travelers.  "We 
can  join  them  and  press  on  in  the  general  direction  in 
which  they  started  and  by  a  route  that  will  take  us  where 
we  wish  to  go.  For  the  experimenting  and  for  starting 
the  whole  country  in  a  vigorous  movement  we  have  to 
thank  the  organized  farmers  who  are  the  natural  allies  of 
all  the  honest,  hard-working  and  deserving  portion  of  the 


AGEICULTUEE  AND  MONOPOLIES  107 

body  politic.  Their  mistakes  have  been  educational  and 
have  taught  lessons  in  political  economy  to  more  pupils 
than  the  schools  could  have  reached.  One  day  our  people 
will  be  better  economists  and  their  demands  will  then  be 
more  general  and  intelligent,  and  will  secure  the  laws 
that  are  needed  for  protecting  the  interest  of  agriculture, 
indeed,  but  also  for  throwing  safeguards  around  every 
honest  interest  in  the  country. 


CHAPTER  VI 

GOVERNMENTAL   MONOPOLIES 

In  speaking  of  difficult  measures  for  regulating  monop- 
olies, one  is  conscious  of  the  fact  that  there  is  one  measure 
which  looks  simple  and  workable.  "Why  should  not  the 
government  take  possession  of  every  industry  which  has 
the  monopolistic  form  ?  If  all  the  mills  in  one  department 
of  business  are  destined  to  be  consolidated  in  one  great 
establishment,  why  should  not  that  establishment  belong 
to  us  all  and  be  run  for  the  benefit  of  us  all?  Is  not 
that  the  obvious  way  to  get  rid  of  a  monopoly  in  the  hands 
of  a  few  of  us  ?  Many  a  man  who  has  no  leaning  towards 
socialism  is  inclined  to  answer  the  question  in  the  affirma- 
tive. If  one  sees  no  way  out  of  the  present  tangle  except 
the  way  of  governmental  ownership  that  measure  has  great 
attractions.  It  is  to  be  frankly  admitted  that  it  is  far 
simpler  in  appearance  than  other  remedies.  It  is  not  alto- 
gether a  simple  and  easy  problem  to  manage  these  great 
monopolies  without  taking  possession  of  them  in  the  name 
of  the  people.  One  is  reminded  of  the  ancient  story  of  the 
man  who  was  rescued  from  the  water  in  an  unconscious 
state  and  of  the  apothecary  who  stood  looking  at  him  con- 
templatively, but  doing  nothing.     ''Why  don't  you  do 

108 


GOVERNMENTAL  MONOPOLIES  109 

something  ? ' '  asked  the  rescuers.  The  apothecary  replied, 
"There  are  eight  rules  to  be  followed  in  resuscitating  a 
drowning  person,  and  for  my  life  I  can  not  tell  which  one 
comes  first. ' '  The  drowned  man  is  reported  to  have  solved 
the  difficulty  by  feebly  remarking  that  if  one  of  the  rules 
called  for  giving  whiskey,  the  others  might  be  disregarded. 
If  the  heroic  measure  of  taking  over  the  great  monopolies 
bodily  into  the  hands  of  the  state  is  on  the  program,  we 
have  no  need  to  concern  ourselves  about  the  other  measures 
that  have  been  advocated.  The  policy  which  depends  on 
seven  difficult  and  dubious  remedies  for  an  evil  may  have 
to  yield  to  one  which  looks  simple  and  efficacious. 

In  this  connection,  of  course,  we  leave  out  of  account  the 
kind  of  governmental  monopoly  that  exists  merely  for  the 
sake  of  revenue.  The  government  has  often  found  it  con- 
venient to  apply  an  indirect  tax  by  monopolizing  the  sale 
of  something:  witness  the  tobacco  monopoly  of  various 
lands.  This  monopoly  would  interest  us  in  connection 
with  the  great  issues  that  are  pending  in  this  country  if  it 
were  adopted  for  the  sake  of  putting  an  end  to  the  exac- 
tions of  a  trust.  As  a  revenue  measure  only  it  has  no  bear- 
ing on  the  present  discussion.  When  an  industry  has  come 
into  the  hands  of  great  and  menacing  corporations  many 
persons  wish  the  government  to  assume  its  management 
for  a  very  different  purpose  than  that  of  merely  raising 
revenue.  It  is  to  prevent  private  individuals  from  taxing 
the  rest  of  the  public  for  their  own  benefit.    It  may  be 


110  THE  PKOBLEM  OF  MONOPOLY 

frankly  granted  that  this  reason  may  always  be  urged  in 
favor  of  governmental  monopolies  as  opposed  to  pri- 
vate ones.  If  the  government  owns  an  industry,  it  will  be 
run  in  behalf  of  us  all;  and  even  a  monopoly  may  be 
welcomed  if  it  is  owned  and  run  by  the  people  and  for  the 
people.  Success  in  that  line,  indeed,  requires  that  the 
government  should  be  honest  and  democratic  in  fact  as 
well  as  in  theory ;  but  granting  that  it  is  so  many  will  con- 
clude that,  if  we  must  have  a  monopoly  of  some  kind— if 
we  must  choose  between  paying  a  tax  to  private  corpora- 
tions and  paying  it  to  ourselves— the  latter  is  preferable. 
It  is  desirable  that  we  who  pay  the  tax  should  have  the 
benefit  of  the  proceeds. 

There  are  various  purposes  in  view  when  the  taking 
possession  of  a  great  industry  is  advocated,  and  it  is  the  aim 
of  some  people  to  secure  radical  changes.  Some  are  looking 
forward  to  a  time  when  the  state  shall  control  everything 
and  own  everything ;  and  to  them  every  step  in  that  direc- 
tion is  a  step  toward  a  remote  and  very  desirable  goal. 
That  is  the  typical  socialistic  view.  Others  simply  advo- 
cate the  taking  possession  of  particular  things  because 
they  see  that  grave  evils  are  connected  with  keeping  them 
in  private  hands  and  they  can  see  no  other  way  of  remedy- 
ing those  evils.  You  can  take  possession  of  railroads  for 
two  utterly  opposite  purposes.  You  can  take  them  be- 
cause you  think  that  that  is  a  good  place  to  begin  if  you 
mean  to  have  the  state  ultimately  possess   everything. 


GOVERNMENTAL  MONOPOLIES  HI 

On  the  other  hand  you  can  take  possession  of  the  railroads 
because  you  do  not  want  the  state  to  take  possession  of 
everything.  You  prefer  to  have  manufacturing  and  com- 
merce in  private  hands,  but  you  are  very  much  afraid  that 
so  long  as  corporations  own  the  railroads  they  will  favor 
the  great  manufacturing  trusts  and  so  stifle  the  competi- 
tion of  independent  mills  on  which  the  welfare  of  the 
public  depends.  You  are  afraid  that  the  railroads  will 
make  secret  arrangements,  as  they  have  sometimes  done, 
with  one  producer,  enable  him  to  crush  his  rivals  and  place 
him  where  he  can  have  the  field  to  himself  and  tax  the 
people  for  an  indefinite  time. 

Now,  for  the  railroads  themselves  to  he  a.  monopoly 
and  charge  rather  high  prices  for  freight  and  passenger 
traffic  is  an  evil,  of  course.  None  of  us  enjoys  paying 
high  prices  for  what  he  gets,  and  therefore  the  mere 
fact  that  the  railroad  itself  charges  a  monopoly  rate 
for  the  service  it  renders  is,  if  it  exists,  an  uncomfort- 
able one.  If  a  railroad  really  had  no  limit  on  its  tax- 
ing power  and  could  charge  what  it  liked,  that  would 
create  a  serious  issue,  but  it  would  be  far  less  serious 
and  menacing  than  what  would  follow  if  the  railroad 
should  ally  itself  with  a  hundred  great  trusts,  help  them 
to  crush  competitors,  and  enable  them,  in  selling  us  goods, 
to  put  prices  as  high  as  they  will.  A  hundred  trusts  which 
make  things  for  us  will  have  us  far  more  at  their  mercy 
than  would  the  one  consolidation  which  merely  does  carry- 


112  THE  TKOBLEM  OF  MONOPOLY 

ing.  We  should  far  rather  pay  high  rates  to  railroads 
only,  and  fair  prices  for  all  goods  that  we  buy  and  use, 
than  to  pay  monopoly  prices  for  what  we  buy  and  use  and 
lower  rates  on  the  railroads.  The  mere  fact  that  the  rail- 
roads are  quasi-monopolies— if  they  are  so— serious  as  that 
fact  is,  is  a  secondary  feature  of  the  situation.  That  they 
help  to  build  monopolies  is,  if  true,  the  more  serious  consid- 
eration, and  the  one  to  which  we  should  have  to  address 
ourselves  with  far  more  energy  than  we  should  to  the 
former  evil. 

The  chief  problem  in  regulating  railroads  is  how  to 
prevent  them  from  building  up  other  corporations  to  the 
point  where  they  gain  a  monopolistic  power.  Now  it 
seems  as  though  the  simplest  way  to  prevent  this  would 
be  to  take  possession  of  the  railroads  and  run  them  in  the 
name  of  the  people,  charging  fair  freight  and  passenger 
rates  and  making  them  uniform  to  all  the  people.  If  this 
were  done  there  would  be  an  end  of  discriminating  freight 
charges  and  of  their  natural  consequence :  the  building  up 
of  big  corporations  at  the  cost  of  little  ones.  "We  should 
free  the  field,  not  of  great  consolidations,  but  rather  of  the 
menace  that  is  in  the  consolidations.  We  should  have  to 
leave  the  trusts,  but  we  should  take  away  their  power  for 
evil.  It  would  be  like  taming  the  dinosaurs,  but  it  could 
be  done.  What,  however,  would  happen  if  we  should  take 
possession  of  the  railroads  ?  Suppose  the  government  does 
this  and  puts  a  definite  stop  to  discriminating  rates  of 


GOVEENMENTAL  MONOPOLIES  jiS 

freight ;  suppose  it  succeeds  in  making  a  successful  sched- 
ule of  railway  charges,  classifying  freight  in  a  scientific 
way,  and  making  charges  uniform  to  every  producer  and 
fair  to  all.  The  charges  would  not  need  to  be  excessively 
low,  if  only  they  ruled  out  the  discriminations,  caprices 
and  uncertainties  in  the  rates.  If  the  government  suc- 
ceeded in  doing  this  and  if,  by  doing  it,  it  took  away  the 
largest  weapon  that  the  manufacturing  trusts  possess,  we 
must  concede  that  it  would  become  possible  for  independ- 
ent competitors  to  live;  and  in  that  case  the  trusts  could 
not  charge  monopolistic  prices.  The  largest  incentive  that 
exists  for  taking  possession  of  other  industries  would  thus 
have  been  removed.  It  is  therefore  possible  to  advocate 
taking  possession  of  the  railroads  for  the  sake  of  removing 
all  necessity  for  taking  possession  of  many  other  things. 
We  can  leave  the  other  things  in  private  hands  if  we  take 
only  the  railroads.  That  is  a  position  which  many  a  man 
takes  and  which  it  is  entirely  reasonable  to  take  as  soon 
as  it  is  proved  that  we  cannot  regulate  freight  charges  in 
any  other  way. 

We  may  be  willing  to  make  one  other  concession  to  the 
advocates  of  the  public  ownership  of  railroads  and  con- 
cede that  it  will  be  very  hard  to  regulate  freight  charges 
so  long  as  we  forbid  pooling,  and  that  if  we  permit  pooling 
then  we  shall  be  forced  to  regulate  the  general  level  of 
charges.  We  have  seen  that  there  is  no  motive  for  dis- 
criminations when  the  different  lines  are  consolidated,  and 

9 


114         THE  PEOBLEM  OF  MONOPOLY 

share  their  general  earnings  on  some  fixed  plan  of  division. 
If  we  permit  consolidation  of  railways  we  subject  our- 
selves to  high  general  charges ;  and  this  evil  must,  in  some 
way,  be  prevented.  Now,  it  is  reasonable  to  believe  that 
the  coming  system  is  one  that  will  legalize  pooling  and 
regulate  the  general  level  of  charges.  We  may  permit  the 
railroads  to  combine  as  they  please,  but  in  reference  to 
their  freight  tariffs  we  must  say  to  them :  * '  Thus  far  and 
no  farther  you  may  go."  We  shall  have  problems  to 
solve  in  connection  with  the  classification  of  freight  and 
shall  have  to  make  it  scientific  and,  at  the  same  time, 
practical.  We  shall  need  all  the  expert  knowledge  that 
we  can  get  from  men  of  scientific  training  and  men  of 
experience;  but  by  such  means  we  shall  be  able  to  get  a 
schedule  of  charges  that  it  will  be  practicable  to  enforce. 
Now  the  difference  between  actually  owning  the  rail- 
roads and  regulating  their  charges  in  this  way  is  less  than 
at  first  would  appear.  We  shall  get  the  advantages  which 
would  come  from  owning  them  if  we  regulate  their  charges. 
If  some  neighbor  of  mine  were  under  the  necessity  of 
furnishing  horses  for  my  personal  use  on  such  terms  as  I 
might  prescribe,  he  might  be  the  nominal  owner  of  the 
horses,  but  I  should  be  the  virtual  owner  and  he  the  keeper. 
If  I  could  not  regulate  the  charges  it  might  be  better  for 
me  to  own  the  horses.  Now,  something  akin  to  that  situa- 
tion would  be  created  if  the  government  should  succeed 
in  regulating  the  general  level  of  railway  charges.    The 


GOVEENMENTAL  MONOPOLIES  II5 

owners  might  keep  their  stock  and  the  charges  would 
certainly  be  fixed  at  rates  which  would  give  them  fair 
dividends;  and  they  would  be  given  the  opportunity  to 
increase  those  dividends  by  making  improvements  in  their 
plants  or  their  management.  They  would  have  to  rise 
early  in  the  morning  and  devise  ways  of  improving  the 
railway  system.  They  would  have  to  be  alert  and  pro- 
gressive to  invent  new  appliances,  to  adopt  other  people's 
inventions  and  to  improve  the  quality  of  the  railroad  ser- 
vice. They  would  be  very  likely  to  do  all  this  far  more 
readily  than  the  public  officials  would  be  likely  to  do  it  if 
the  railroads  were  in  the  hands  of  the  government.  If, 
therefore,  we  can  have  the  result  that  we  desire  in  the  way 
of  fair  charges,  while  letting  other  people  have  the  pleas- 
ure of  doing  the  inventing  and  of  performing  the  arduous 
duties  connected  with  management,  we  may  well  refrain 
from  placing  the  railways  under  government  ownership. 
The  difference  between  a  thorough  system  of  governmental 
regulation  and  a  system  of  governmental  ownership  is  by 
no  means  as  wide  as  it  appears ;  and  what  difference  there 
is  is  in  favor  of  the  regulated  private  ownership.  Such 
ownership,  if  unregulated,  has  little  to  commend  it. 
Even  though  it  were  progressive  and  inventive,  the 
people  would  not  primarily  benefit  from  the  improve- 
ments made.  Moreover,  if  the  private  managers  of  the 
railways  had  a  secure  monopoly  their  enterprise  would 
show  itself  far  more  in  making  unfair  deals  with  trusts 


116         THE  PEOBLEM  OF  MONOPOLY 

and  in  building  up  numerous  monopolies  besides  their  own 
than  in  improving  their  actual  service.  Such  things  we 
are  forced  to  stop,  and,  if  we  cannot  stop  them  by  regula- 
tion, the  argument  in  favor  of  governmental  ownership 
will  have  irresistible  force  and  the  people  will  at  some  time 
jdeld  to  it.  We  would  better  make  a  thorough  test  of  the 
alternative  plan  and  adjourn  the  question  of  public  owner- 
ship till  the  plan  of  public  control  shall  have  been  proved 
a  failure. 

Next  to  the  railroads  the  mines  are  in  the  strongest 
strategic  position  and  possess  the  greatest  power  to 
strengthen  the  position  of  monopolies.  The  demand  for 
governmental  ownership  of  railroads  is  paralleled  by  a 
demand  for  the  public  ownership  of  mines.  If  the  govern- 
ment owned  the  anthracite  coal  mines,  there  is  little  chance 
that  we  should  ever  suffer  from  a  coal  famine;  but  there 
is  also  little  chance  that  we  should  have  very  cheap  coal. 
We  might  not,  indeed,  have  to  pay  much  higher  prices 
than  we  are  paying  at  present  and  there  is  a  large  prob- 
ability that  we  should  all  be  treated  alike  and  that  private 
monopolies  would  not  be  favored.  We  might  have  a 
fairer  system  of  dealing  than  we  now  have ;  but  we  should 
scarcely  get  a  better  service  at  lower  prices.  The  govern- 
ment would  be  under  a  political  pressure  to  pay  miners 
high  wages  and  to  exact  from  them  comparatively  little 
work. 

One  who  travels  through  the  northwest  and  measures 


GOVEENMENTAL  MONOPOLIES  117 

the  extent  of  the  deposits  of  iron  ore  which  are  there  to  be 
found,  and  which  are  fit  for  the  making  of  steel,  does  not 
get  the  impression  that  there  is  any  scarcity  of  that  kind 
of  ore  in  the  United  States.  He  would  think  there  is 
enough  of  it  to  build  all  the  houses  that  could  stand  on  the 
dry  land  and  all  the  ships  that  could  sail  on  the  sea.  The 
supply,  however,  is  not  thus  unlimited.  In  so  far  as  is 
known  we  can  use  up  all  the  ore  we  have  suitable  for  steel 
production  well  within  the  limits  of  the  present  century. 
These  limited  though  vast  deposits  of  ore  may  be  monopo- 
lized through  the  more  vast  capital  of  a  corporation,  and 
in  that  case  competition  in  the  making  of  steel  may  be 
difficult.  Whoever  controls  the  ore  will  have  his  hand 
upon  many  industries  just  as  the  one  who  controls  trans- 
portation, and  it  might  be  exceedingly  difficult  to  carry 
out  the  policy  of  regulating  such  a  trust  by  the  plan  which, 
in  a  foregoing  chapter,  has  been  advocated.  Keeping  the 
field  open  and  compelling  the  fair  treatment  of  rivals  is 
enough  when  there  are  rivals ;  but  here  is  one  case  where 
rivals  may  be  excluded.  The  case  affords  a  very  strong 
argument  in  behalf  of  the  appropriation  of  the  ore  deposits 
by  the  government.  It  would  be  possible  to  take  them, 
pay  for  them  and  use  them  in  the  interest  of  the  people. 
If  an  emergency  were  really  to  arise  in  which  some  ''octo- 
pus" of  the  future  had  a  deadly  grip  on  us  and  we  could 
not  throw  him  off  except  by  resorting  to  the  expedient  of 
expropriating  the  ore  deposits,  it  is  perfectly  safe  to  say 


118  THE  PROBLEM  OF  MONOPOLY 

that  the  people  of  the  country  would  vote  to  take  posses- 
sion of  them  and  would  not  regard  themselves  as  doing 
anything  revolutionary  in  the  act. 

Scarcely  anything  is  quite  as  exceptional  as  are  high- 
ways and  mines  in  their  relation  to  other  interests.  No 
other  form  of  property,  when  it  is  in  private  hands, 
confers  on  its  owners  so  much  power  to  build  up  private 
monopolies.  Shall  we  take  possession,  for  instance,  of 
street-car  lines  and  run  them  for  the  benefit  of  the  peo- 
ple? There  might  be  a  good  argument  made  for  that 
policy  but  it  would  rest  on  an  entirely  different  ground 
from  the  argument  which  is  made  in  behalf  of  pub- 
lic ownership  of  the  general  railroads.  The  street  car 
lines  may  he  monopolies,  but  they  are  not  making  them. 
They  are  not  building  up  great  trusts.  If  we  take  posses- 
sion of  them,  it  will  simply  be  because  we  think  we  can  get 
a  better  and  a  cheaper  service  in  that  way  than  we  can  in 
some  other.  Now  if  the  time  should  ever  come  when  a  fair 
series  of  experiments  had  been  tried  and  when  it  had  been 
proved  that  better  and  cheaper  service  can  be  gotten  by 
taking  possession  of  the  street-car  lines  than  by  leaving 
them  in  the  hands  of  private  corporations — though  under 
a  great  deal  more  and  closer  regulation  than  they  have 
ever  been  under— then  the  people  will  vote  to  take  posses- 
sion of  them ;  but  it  will  be  well  to  wait  until  the  experi- 
ment of  thorough  regulation  has  been  tried  before  taking 
the  other  step.     Here  again  the  economic  difference  be- 


GOVEENMENTAL  MONOPOLIES  119 

tween  actually  owning  the  lines  and  regulating  them  is 
not  a  very  wide  difference;  but  in  this  connection  the 
people  will  always  think  of  political  effects  as  well  as  of 
economic  ones.  The  street-car  lines  are  very  much  in 
politics,  and  if  we  argue  the  question  on  political  grounds, 
we  shall  have  a  difficult  problem  to  settle.  We  know  that 
politics  is  in  a  somewhat  debauched  state  when  great  cor- 
porations are  levied  on  for  party  contributions;  but  we 
know  also  that  there  is  peril  of  another  sort  when  a  city 
takes  possession  of  great  enterprises  and  has  an  army  of 
employees  under  the  control  of  the  bosses.  The  private 
citizen  would  be  "between  the  devil  and  the  deep  sea"  if 
these  were  the  only  alternatives.  The  most  earnest  effort 
we  have  ever  put  forth  in  connection  with  anything  munic- 
ipal should  be  put  forth  in  the  experiments  that  will  de- 
cide whether  the  public  service  corporations  can  safely  be 
allowed  to  remain  as  a  part  of  our  general  system. 

Shall  we  nationalize  the  leading  trusts?  Shall  we 
manufacture  steel,  furnish  all  the  oil,  and  so  forth  through 
the  whole  list?  That  is  asking  whether  the  government 
shall  go  into  a  hundred  different  kinds  of  private  busi- 
nesses. That  is  the  most  far-reaching  question  of  all ;  and 
while  there  are  many  people  who  think  we  are  tending 
somewhat  in  that  direction— people  who,  in  a  wholly 
speculative  way,  think  that  in  the  remote  future  the  state 
will  bo  run  upon  exactly  that  plan— there  are  not  many 
who  favor  making  that  experiment  now.    The  theoretical 


120         THE  PROBLEM  OF  MONOPOLY 

argument  tells  rather  against  it  than  for  it,  and  in  any 
case  it  is  altogether  too  radical  a  plan  for  a  country  to 
adopt  or  for  wise  men  to  advocate.  No  large  political 
party  will  venture  to  advocate  it  and,  except  as  a  subject 
of  speculation,  we  may  leave  it  out  of  view.  Within  the 
bounds  of  possibility  it  is  that  the  government  may  take 
possession  of  some  departments  of  industry;  but  if  so  it 
will  do  this,  not  as  the  entering  wedge  of  genuine  socialism, 
but  in  a  wholly  different  way.  It  may  conceivably  take 
railroads,  mines  or  street-car  lines ;  but,  if  so,  it  will  have 
in  view  an  object  which  is  not  very  different  from  the  one 
that  would  be  gained  by  successfully  regulating  them. 
That  it  is  wise,  before  resorting  to  government  ownership, 
to  experiment  with  regulation  more  earnestly  and  judi- 
ciously than  we  have  ever  done,  is  sufficiently  clear. 

There  is  a  general  argument  that  still  has  weight  with 
many  people  whose  opinions  we  should  respect.  "We  have 
seen  that  the  successful  regulating  of  trusts  requires  that 
we  should  keep  the  essential  power  of  competition  alive. 
"We  should  keep  the  field  open  so  that  when  a  trust  charges 
exorbitant  prices  new  mills  will  appear  selling  goods  more 
cheaply.  Many  a  man  in  these  days,  however,  says  that 
competition  itself  will  not  save  us,  because  it  is  a  hard  and 
grinding  process,  from  which  we  ought  to  be  delivered  and 
can  be  delivered  only  by  socialism.  Competition  in  the 
form  in  which  we  have  sometimes  had  it  presents  itself  in 
an  unlikeable  guise  and  sometimes  works  harshly.     Yet 


GOVEENMENTAL  MONOPOLIES  121 

even  while  it  was  working  with  occasional  severity  it  was 
acting  as  a  guarantor  of  public  security  and  of  progress. 
It  prevented  producers  from  charging  extortionate  prices. 
In  a  way  it  succeeded,  imperfectly  indeed,  in  protecting 
even  the  worker  against  the  harsh  treatment  to  which  he 
might  have  been  exposed ;  for  there  is  no  position  whatever 
in  which  the  worker  will  be  at  such  a  decided  disadvantage 
in  bargaining  for  his  wages  as  where  he  is  dealing  with  a 
great  monopoly  and  finds  in  the  market  no  other  employer 
to  whom  he  can  resort.  Even  the  terrible  conditions  of  a 
century  ago  were  not  as  devoid  of  the  redeeming  element 
of  hope  as  would  be  those  which  would  result  from  destroy- 
ing the  competition  to  which  some  persons  still  unintelli- 
gently  ascribe  the  abuses  of  the  present  day. 

It  is  necessary  that  competition  should  remain  alive. 
It  works  more  smoothly  and  benignly  when  it  is  in  the 
potential  form  rather  than  in  the  active  form,  provided 
only  that,  in  the  potential  state,  it  has  its  normal  scope  and 
efficiency.  When  two  people  bid  against  each  other  in 
selling  labor— when  one  says:  "I  will  take  less"  and  the 
other:  "I  will  take  still  less,"  until  neither  one  is  able  to 
make  a  living,  that  is  an  evil;  but  an  even  greater  evil 
comes  when,  in  buying  labor,  there  is  only  one  party  in 
the  field  with  no  one  to  overbid  his  first  and  minimum 
offer.  If  some  one  is  ever  able  and  ready  to  bid  higher 
than  this,  the  situation  is  relieved  even  though  there  may 


122  THE  PKOBLEM  OF  MONOPOLY 

be  110  actual  auctioning  up  of  the  rate.  The  first  offer  will 
be  more  nearly  satisfactory. 

In  the  selling  of  goods  and  services  the  best  competition 
has  always  been  in  the  potential  form.  In  a  village  there 
may  be  one  blacksmith  to  shoe  the  horses ;  yet  one  never 
hears  of  a  serious  movement  against  the  village  blacksmith, 
and  he  is  not  regarded  as  a  monopolist.  He  does  not  ac- 
tually charge  exorbitant  prices,  for  the  reason  that,  if  he 
did,  another  blacksmith  would  soon  appear.  That  is  an 
instance  of  potential  competition,  and  this  is  the  variety 
which  ought  forever  to  survive.  That  implies  that  it 
ought  to  be  made  to  survive,  even  after  the  formation  of 
great  trusts.  This  will  have  the  effect  of  relieving  the 
harshness  of  the  more  overt  competition,  which  forces  both 
wages  and  prices  to  low  levels.  There  will  be  a  quiet  and 
real  force  at  work  which  will  insure  a  certain  justice  in  the 
fixing  of  wages  and  prices. 

Suppose  that  we  succeed  in  the  good  time  that  is  coming 
in  controlling  private  monopolies,  in  regulating  carriers 
and  in  securing  the  survival  of  independent  competition 
and  a  regime  of  honest  wages  and  fair  prices— the  question 
arises  whether  this  old  world  into  which  we  were  born,  the 
only  one  we  have  the  option  of  living  in,  will,  after  all,  be 
an  altogether  bad  world.  It  is  natural  for  persons  who 
have  a  comfortable  place  in  society  to  regard  that  society 
as  generally  good  and  for  those  who  have  an  uncomfort- 
able place  to  take  the  opposite  view.     Let  us  try  to  see 


GOVEENMENTAL  MONOPOLIES  123 

both  sides  of  the  question  and  reach  a  fair  conclusion. 
Let  us  not  either  deny  the  existence  of  evils  or  deny  that 
they  can  be  reduced  by  wise  and  determined  action.  Let 
us  try  to  draw  a  comparison  between  the  world  as  it  will 
be,  if  we  succeed  in  greatly  improving  it,  and  the  world  as 
it  would  be  if  we  pursued  the  plan  of  revolutionizing  it, 
and  we  shall  find  that,  in  the  former  case,  we  have  a  very 
inspiring  outlook  for  the  future.  The  world  as  it  is  is  not 
as  bad  as  it  might  be ;  and  there  is  no  doubt  that  reforms 
will  make  it  far  better  than  it  is.  The  world  as  it  may 
come  to  be  after  years  of  evolution — not  unconscious  evolu- 
tion, but  change  brought  about  by  intelligent  action— is 
capable  of  being  better  than  any  world  we  have  thus  far 
seen.  What  could  possibly  happen,  under  such  a  system? 
We  could  have  a  regime  of  honest  pay  for  labor,  we  could 
have  a  system  in  which  a  man's  wages  would  correspond 
with  the  value  of  what  he  creates.  When  that  one  single 
thing  is  secured,  it  will  be  of  so  much  more  importance 
than  anything  else  that  will  follow  that  we  may  well  con- 
sider the  battle  largely  won.  There  is,  however,  no  class 
that  needs  more  to  live  in  a  progressive  world— one  which 
shall  forever  become  more  and  more  productive— than 
those  who  earn  their  living  by  labor ;  and  if  we  can  secure 
a  regime  of  honest  payment  for  labor  which  is  still  con- 
sistent with  general  progress,  we  shall  have  won  the  battle 
completely.  Securing  to  laborers  what  they  create  and 
enabling  them  from  decade  to  decade  to  produce  more  and 


124         THE  PEOBLEM  OF  MONOPOLY 

more  is  gaining  so  much  that  further  gains  are  secondary 
and  comparatively  unimportant. 

Now  the  tendency  of  competition  is  to  secure  both  of 
these  things.  Its  influence  goes  toward  making  the  world 
both  honest  and  progressive;  and  if  we  can  break  down 
the  power  of  monopoly,  we  shall  have  done  nearly  all  that 
we  can  toward  bringing  the  society  we  live  in  to  this  state. 
Private  monopoly  is  what  stands  squarely  between  us  and 
that  consummation;  and  the  kind  of  competition  that  is 
here  commended  is  that  which  would  slowly  and  surely 
transform  our  vast  collective  workshop  and  make  it  re- 
semble more  and  more  closely  the  ideal  picture  which  a 
healthy  optimism  has  always  drawn  of  the  future  of 
humanity.  This  depends  on  combining  progress  in  the 
arts  of  production  with  a  fair  division  of  the  fruits  of  the 
process.  Give  to  the  worker,  all  the  while,  what  he  creates 
and  enable  him  to  create  more  and  more  as  the  years  go  on. 
It  would  not  be  altogether  desirable  for  a  man  to  get  every 
penny  that  he  creates,  provided  that  were  secured  by 
accepting  a  scheme  of  industry  which  would  prevent  him 
from  creating  very  much ;  but  if,  while  getting  even  a  tol- 
erable portion  of  what  he  creates,  he  lives  under  a  regime 
which  enables  him  continually  to  produce  more  and  more, 
his  condition  affords  an  inspiring  outlook.  Progress  is 
the  essential  feature  of  it.  We  would  rather  live  in  a 
progressive  world  that  for  the  moment  is  uncomfortable 
than  in  a  stationary  one  that  starts  at  a  comfortable  point 


GOVERNMENTAL  MONOPOLIES  125 

but  never  gets  beyond  it.  We  would  even  rather  live  in  a 
world  which  now  treats  us  ill  than  in  one  which  treats  us 
well,  but  will  treat  our  grandchildren  no  better.  We  want 
our  class  to  be  better  off  two  generations  hence  and  to 
know  that  all  humanity  will  later  reach  a  goal  that  corre- 
sponds with  our  hopes  and  dreams.  It  is  better  to  be  in 
a  progressive  purgatory  than  in  an  unprogressive  para- 
dise. Starting  in  a  paradise  and  having  a  purgatory  as 
a  goal  would  afford  little  happiness;  but  starting  in  a 
purgatory  and  having  a  paradise  as  a  goal  would  ensure 
happiness. 

Now  the  survival  of  an  efficient  kind  of  potential  com- 
petition means  what— a  paradise?  No;  but  it  means  an 
open  road  toward  it  and  sure  progress  along  the  road.  It 
means  that  the  evil  state  which  existed  scarcely  over  fifty 
years  ago  will  recede  farther  and  farther  into  the  past, 
and  that  the  surviving  evils  of  the  present  day  will,  little 
by  little,  become  less,  till,  though  we  shall  not  see  a  para- 
dise at  the  next  station  on  the  road,  we  shall  see  something 
like  it  gradually  growing  into  clearness  of  outline  at  the 
far  away  terminus  of  the  route.  The  world  will  be  tending 
surely,  and  perhaps  even  rapidly,  in  that  direction. 

Is  there  anything  more  that  is  ensured  in  the  future 
by  this  suppression  of  monopoly  without  any  attack  on 
private  property?  The  retention  of  the  essentials  of 
the  present  condition  and  the  abolition  of  the  greater 
evils    that   now   attach   themselves   to    it   will    make    it 


126  THE  PKOBLEM  OF  MONOPOLY 

possible  for  us  to  enjoy  a  great  deal  of  genuine  economic 
democracy.  We  have  political  democracy,  or  think  we 
have.  There  is  something  to  be  said  as  to  who  really 
controls  our  state;  but  in  politics  we  have  the  form 
of  a  democracy.  We  do  not,  in  industry,  have  even  the 
form  of  a  democracy.  An  economic  democracy  would  be 
a  world  that  should  treat  different  classes  of  inhabitants 
with  some  approach  to  equality,  and  we  live  in  one  which 
gives  to  one  man  nothing  and  to  another  uncounted  mil- 
lions. Yet  in  a  sense  it  may  be  said  that  a  world  might  be 
essentially  democratic  even  though  there  were  a  great 
many  billionaires  in  it,  provided  that  their  great  fortunes 
were  not  made  by  way  of  monopoly,  which  gets  gains  by 
taking  them  out  of  producers'  pockets,  but  by  the  method 
of  genuine  production.  If  a  man  can  create  a  billion  dol- 
lars, let  him  have  it  and  welcome.  If  he  can  make  a  great 
discovery  and  bring  to  light  a  principle  which  will  make 
it  easier  for  humanity  to  make  a  living  than  it  is  now,  we 
are  willing  that  he  should  take  toll  on  the  proceeds  of  it, 
even  though  that  should  bring  him  a  billion  dollars.  If, 
however,  he  only  gathers  into  his  own  pocket  some  of  the 
wealth  that  would  exist  in  any  case,  we  should  grudge  him 
every  penny  of  his  gains;  and  the  test  that  should  be 
applied  to  the  billionaire  of  the  future  is  one  that  will  tell 
whether  his  great  fortune  is  or  is  not  a  new  creation— 
whether  it  has  been  brought  out  of  non-existence  by 
forces  which  he  has  set  working  or  was  already  existent  in 


GOVEENMENTAL  MONOPOLIES  127 

the  pockets  of  other  men  before  he  managed  to  get  it  into 
his  own.  Now  this  is  the  main  difference  between  the 
honest  way  of  making  money  and  the  monopolistic  one; 
and  we  ought  not  to  care  how  many  men  there  were  in 
this  world  worth  a  thousand  million  dollars  apiece,  if  they 
got  their  money  honestly  by  making  a  net  addition  to  the 
wealth  of  the  world.  Rather  should  we  welcome  the 
advent  of  any  number  of  such  fortunes ;  for  we  could  not 
have  such  an  addition  to  wealth  as  that  would  signify 
without  having  very  high  wages.  A  world  fairly  glutted 
with  capital  would  be  the  most  comfortable  world  imag- 
inable for  the  laborer.  If  one  were  to  choose  between 
being  one  of  these  workers  getting  high  pay  and  being 
assured  employment,  or  a  billionaire  the  abundance  of 
whose  wealth  will  not  suffer  him  to  sleep— or,  for  that 
matter,  to  eat— many  a  man  would  rather  be  the  worker. 
The  billions  upon  billions  of  wealth  which  the  world  would 
contain  would  ensure  to  the  man  who  now  gets  two  dollars 
a  day,  three  or  four ;  and  that  is  a  gain  worth  having.  The 
thousand  million  dollars  that  the  great  capitalist  may 
accumulate,  if  it  means  sleeplessness,  and  dyspepsia  and 
a  short  life,  and  no  very  great  regret  on  his  part  for  the 
shortness  of  it,  is  a  very  negative  blessing.  It  is  better 
to  be  the  man  whose  honest  labor  is  well  paid  for  because 
of  that  vast  sum  of  money  than  the  man  whose  life  is 
crushed  and  shortened  by  the  possession  of  it.  It  is  pos- 
sible that  the  future  may  bring  us  to  a  condition  in  which 


128  THE  PROBLEM  OF  MONOPOLY 

wc  shall  rejoice  in  the  presence  of  the  billionaire  because 
his  fortune  will  have  been  honestly  created  and  not  filched 
from  the  people  by  the  arts  of  the  monopoly.  Then  will 
the  more  than  Croesus-like  fortune  do  greater  and  better 
things  for  laborers  than  it  will  for  its  owner,  and  we  can 
look  at  it  without  envy  because  we  live  with  it  without 
injury.  The  economic  ideal  of  the  future  is  the  one  which 
will  combine  inequality  of  outward  and  material  posses- 
sions with  a  constant  approach  to  equality  of  men's  inward 
states,  and  will  cause,  not  wealth,  but  well  being  to  be 
democratically  shared.  Such  is  the  effect  of  that  suppres- 
sion of  monopoly  and  that  restoration  of  freedom  which 
are  within  our  reach  if  we  strive  for  them  wisely  and 
strenuously. 


THE  DISTRIBUTION 
OF  WEALTH 

A  Theory  of  Wages,  Interest  and  Profits 

BY 

JOHN  BATES  CLARK 

Professor  in   Columbia    University 
AUTHOR  OF  "THE  CONTROL  OF  TRUSTS,"  ETC. 

Cloth  8vo.  $3-00  net 


"It  is  not  too  much  to  say  that  the  publication  of  Professor  Clark's 
bookT  marks  an  epoch  in  the  history  of  economic  thought  in  the  United 
States.  Its  inspirations,  its  illustrations,  even  its  independence  of  the 
opinions  of  others,  are  American  ;  but  its  originality,  the  brilliancy  of  its 
reasoning,  and  its  completeness,  deserves  and  will  surely  obtain  for  it  a 
place  in  world  literature." — Henry  R.  Seager,  in  the  Annals  of  the  Ameri- 
can Academy. 

"  Professor  Clark's  book  deserves  more  attention  from  genera!  readers 
than  they  are  accustomed  to  bestow  upon  works  on  abstract  economics. 
It  is,  indeed,  a  book  written  by  an  economist  for  economists,  but  its  style, 
its  clear,  and  its  basic  thought  illuminates  a  subject  which  the  thinking 
public  continually  discusses." —  The  Outlook. 

"The  student  of  social  economy  will  find  it  lucid,  able,  and  abreast 
with  the  latest  thought  on  the  subject;  and  will,  in  his  turn,  deserve 
stimulus  and  suggestion  from  Professor  Clark's  statement  of  his  theory." 
—  Neiu  York  Times  Saturday  Re'vieiv. 


THE  MACMILLAN  COMPANY 

66  Fifth  Avenue  NEW  YORK 


THE  CONTROL  OF 
TRUSTS 

An  Argument  in  Favor  of  Curbing  the  Power  of 
Monopoly  by  a  Natural  Method 

BY 

JOHN  BATES  CLARK 

Professor  in  Columbia   University 
AUTHOR  OF  "THE  DISTRIBUTION  OF  WEALTH,"  ETC. 

Cloth  l2mo.  60  cents  net 


"  Professor  Clark's  Utile  book  is  the  best  statement  in  small  compass  of 
the  trust  problem  that  we  have  yet  seen.  He  accepts  the  trust  as  an  inevit- 
able factor  in  economic  progress  and  decries  the  attempt  to  legislate  it  out 
of  existence  by  summary  laws.  The  remedy  for  the  evils  that  attend  the 
concentration  of  power  and  capital  in  a  few  hands  is  to  be  found  in  the 
retention  of  the  principle  of  competition  and  the  suppression  of  illegal  and 
predatory  methods  on  the  part  of  the  trusts.  Regulative  rather  than  dras- 
tic legislation  is  needed." — Public  Opinion. 

"  The  argument  is  brief,  but  comprehensive,  any  exhaustive  discussion 
being  avoided,  while  conditions  are  described  in  strong,  terse  language. 
The  author  believes  that  present  peril  lies  largely  in  the  crushing  out  of 
the  really  efficient  producer  who  can  make  goods  even  more  cheaply  than 
the  trust,  and  these  the  law  must  be  made  to  protect  in  distribution." — 
Toledo  "Blade. 

"  Not  only  has  Professor  Clark  something  to  say,  but  he  says  it  with 
such  force  and  brevity  that  the  busiest  man  or  woman  can  find  time  to  lis- 
ten to  him.  Moreover,  he  understands  the  rare  art  of  writing  a  preface. 
The  straightaway  manner  in  which  he  outlines  the  scope  of  his  book 
reminds  one  of  the  famous  first  lines  in  Macaulay's  '  History  of  England,* 
and  promises  much  which  this  book  fulfills." — Boston  Advertiser. 


THE  MACMILLAN  COMPANY 

66  Fifth  Avenue  NEW  YORK 


UC  SOUTHERM  RFGIONAL  LIBRARY  FACILITY 


AA    001  147  201     6 


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UNIVERSTY  of  CALIFORNIA' 

AT 
LOS  ANGELF9 


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